Swedish fashion retailer H & M Hennes & Mauritz AB strengthened its profitability in the third quarter of 2026 as tighter purchasing, lower costs and operational improvements helped lift margins despite ongoing logistics challenges.
For the three months ended August 31, 2026, sales increased 1% in local currencies even though the group operated roughly 2% fewer stores than a year earlier. The performance reflected a positive response to its summer ranges, particularly towards the end of the quarter.
Gross profit advanced 2%, while gross margin rose to 54.0% from 52.9%. Selling and administrative expenses declined 1%, contributing to a 23% increase in operating profit. The operating margin consequently widened to 10.6%, compared with 8.6% in the year-earlier period.
Profit after tax increased 28%, while earnings per share rose to 2.58 from 2.01. Cash flow from operating activities also improved, increasing 19% during the quarter.
“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,” said Daniel Ervér, chief executive officer, H & M Hennes & Mauritz AB.
Purchasing and cost measures lift margins
H&M said profitability benefited from ongoing improvements in purchasing and cost management, alongside more efficient operations. Both gross and operating margins received a boost of around 1.6 percentage points from one-off effects associated with tariffs and goods imports.
These effects relate partly to higher costs recorded in previous quarters following changes affecting imported merchandise.
Inventory increased compared with the previous year, mainly reflecting a greater value of goods in transit. Global supply-chain disruption and temporary consolidation work within H&M’s European logistics network also contributed to the increase.
Despite the higher stock level, the retailer said the overall composition of its inventory remained healthy.
Digital transformation continues
The H&M Q3 2026 performance also comes as the company continues to invest in its digital operating model. H&M is working to improve decision-making across product development, purchasing, inventory allocation, marketing and sales.
The retailer is simultaneously increasing the proportion of products purchased closer to the selling season. It is also reviewing its store network, upgrading selected locations and developing a more personalised digital shopping experience.
The H&M Q3 2026 performance reflects the company’s broader effort to combine sales growth with greater operational efficiency.
For September, H&M expects sales in local currencies to rise 1% year on year. The company said its priorities include strengthening the customer proposition while navigating elevated living costs, with supply-chain improvements, artificial intelligence and a simpler organisational structure forming part of its ongoing strategy.
