For the three months ended August 31, 2026, net sales increased from approximately SEK 57 billion ($5.75 billion) in the prior-year quarter. In local currencies, sales increased 1%, despite the company operating approximately 2% fewer stores than a year earlier.
Operating profit reached SEK 6.04 billion ($609 million), compared with SEK 4.91 billion ($495 million) in the third quarter of 2025.
The company’s operating margin improved to 10.6% from 8.6%, reflecting stronger gross profitability and continued expense management. However, the latest quarter benefited from about 1.6 percentage points of nonrecurring positive effects related to tariffs and imported goods that had increased merchandise costs in earlier quarters. These effects contributed to improvements in both reported gross margin and operating margin.
Gross profit increased to SEK 30.87 billion ($3.11 billion) from SEK 30.14 billion ($3.04 billion), while the gross margin expanded to 54% from 52.9%.
Selling and administrative expenses declined approximately 1% to SEK 24.83 billion ($2.50 billion), compared with SEK 25.17 billion ($2.54 billion) a year earlier. H&M attributed its improved profitability to purchasing efficiency, cost controls, and measures designed to simplify operations.
Net income increased to SEK 4.10 billion ($413 million) from SEK 3.21 billion ($324 million), while earnings per share rose to SEK 2.58 ($0.26) from SEK 2.01 ($0.20).
Operating cash flow increased 19% to SEK 11.91 billion ($1.20 billion) during the quarter.
For the first nine months of fiscal 2026, H&M reported SEK 161.62 billion ($16.29 billion) in revenue, compared with SEK 169.06 billion ($17.04 billion) in the previous year. Although reported revenue declined in Swedish kronor, sales were approximately unchanged in local currencies.
Nine-month operating profit increased 12% to SEK 13.46 billion ($1.36 billion), compared with SEK 12.03 billion ($1.21 billion) in the prior-year period.
The company’s operating margin improved to 8.3% from 7.1%, while net income increased to SEK 8.77 billion ($884 million) from SEK 7.75 billion ($781 million). Nine-month operating cash flow rose 17% to SEK 26.52 billion ($2.67 billion).
H&M is continuing to optimize its store portfolio while expanding its digital operations. At the end of August, the company operated 4,023 stores, compared with 4,118 a year earlier.
During the first nine months of fiscal 2026, H&M opened 59 stores and closed 137 locations. For the full fiscal year, the company plans to open approximately 90 new stores while closing around 170 locations.
The store optimization strategy includes upgrading existing locations, improving layouts, introducing additional technology, and directing investment toward markets with stronger growth opportunities.
H&M is also expanding internationally. During the third quarter, the company opened its first two H&M stores in Paraguay. It plans to enter Malta and Azerbaijan during the fourth quarter of 2026 and launch its first store in Argentina in 2027 through a franchise arrangement. The company also expects its ARKET brand to open its first store in Lithuania during the fourth quarter.
Digital commerce remains an important component of H&M’s strategy, with more than 30% of group sales generated online.
The company intends to improve the integration of its digital and physical retail operations while continuing to invest in technology across product development, purchasing, inventory allocation, and marketing. H&M is also increasing its use of artificial intelligence to support operational efficiency and improve the customer experience.
Inventory reached SEK 39.36 billion ($3.97 billion), compared with SEK 37.94 billion ($3.82 billion) a year earlier.
The increase was primarily attributable to a higher value of goods in transit, reflecting global supply chain disruptions and temporary effects from the consolidation of the company’s European logistics network.
H&M expects new European warehouses to become operational gradually during 2026 and 2027, supporting inventory availability and additional growth capacity.
At the end of August, H&M held SEK 26.51 billion ($2.67 billion) in cash and cash equivalents, alongside SEK 17.81 billion ($1.80 billion) in undrawn credit facilities. Its total liquidity buffer reached approximately SEK 44.32 billion ($4.47 billion).
Looking ahead, the company expects September 2026 sales to increase approximately 1% in local currencies compared with the same month a year earlier.
Management remains focused on improving profitability, increasing sales productivity, and developing a more flexible retail and supply chain operating model.
KEY QUOTES:
“Our work – especially within purchasing, cost control and more efficient operations – has contributed to a more profitable business. Although sales developed in a positive direction during the quarter, we see further potential to increase sales going forward.”
Daniel Ervér, CEO of H&M Group
