Swedish apparel giant H&M delivered a solid third-quarter performance, exceeding profit estimates, but management warned of margin pressure ahead due to rising U.S. import tariffs.
From June through August, H&M’s operating profit rose to 4.91 billion Swedish crowns, up from 3.51 billion the previous year. Analysts had forecast ~3.68 billion. Despite a slight drop in nominal sales to 57.0 billion crowns, local-currency growth, disciplined cost control, and a stronger product mix all contributed to the solid margin expansion.
Inventory levels fell ~9%, underlining improved demand dynamics and fewer markdowns relative to past seasons. H&M’s stock responded strongly, jumping ~10% during trading.
Yet, the company sounded a note of caution: elevated U.S. import tariffs threaten to erode margins going forward. To mitigate this risk, H&M is exploring alternative sourcing routes, especially closer to the U.S. market.
Under CEO Daniel Erver, H&M has been refining its product mix and trend responsiveness to better compete with rivals like Shein and Zara.
Market watchers praised the operational discipline and margin strength, but remain wary. The upcoming quarters will test how resilient H&M’s model is in a high-cost, tariff-challenged environment.
