Swedish clothing retailer H&M Hennes & Mauritz AB has unveiled impressive profitability results for the fiscal year 2025 (FY25), which concluded on November 30. This positive trend was backed by effective cost management, enhanced inventory productivity, and a better customer offering, despite facing modest sales growth and adverse currency effects. In local currencies, net sales grew by 2%. When translated to Swedish Krona (SEK), net sales reached SEK 228,285 million (about $25.8 billion), lower than SEK 234,478 million from the previous fiscal year due to negative currency shifts.
Gross profit amounted to SEK 121,821 million, maintaining a consistent gross margin of 53.4%. Meanwhile, selling and administrative costs dipped by 4% to SEK 103,292 million (around $11.7 billion).
Operating profit rose to SEK 18,395 million, an increase from SEK 17,306 million, bringing the operating margin up to 8.1% from 7.4%. Profit after tax reached SEK 12,085 million, equivalent to earnings per share of SEK 7.58. Cash flow from operations, adjusting for working capital changes, was reported at SEK 31,120 million, as stated by H&M in a press release.
Regionally, Western Europe continued to be H&M’s largest market at SEK 79,195 million. Sales in this region were flat in SEK but indicated a 2% growth in local currencies, suggesting stable core demand. In contrast, Eastern and Southern Europe exhibited the strongest growth, with local currency sales up by 4% and 5%, respectively. The Nordics experienced a 1% decline in local currencies, reflecting a more mature market landscape. Sales in North and South America also softened, with declines of 5% in SEK and 1% in local currencies. Similarly, Asia, Oceania, and Africa recorded a drop of 7% in SEK and 1% in local currencies due to weakened markets and currency fluctuations.
H&M’s store network streamlined further, with the total number of stores decreasing to 4,101, down from 4,253 reflecting a net reduction of 152 stores over the year. The most significant closures occurred in Asia, Oceania, and Africa, while North and South America were the only regions where new stores were added.
In the fourth quarter of FY25, local currency sales rose by 2%, even with a store base approximately 4% smaller than the previous year. In SEK terms, Q4 net sales fell to SEK 59,221 million from SEK 62,193 million, impacted by a roughly 7-percentage point negative currency translation due to the stronger krona.
The gross margin improved to 55.9%, up from 54.6%, and operating profit surged by 38% to SEK 6,364 million, enhancing the operating margin to 10.7%. Profit after tax rose to SEK 4,332 million, or SEK 2.72 per share. Additionally, inventory levels dropped 12% YoY to SEK 35,427 million, indicating greater stock efficiency.
On the sustainability front, H&M reported a roughly 30% reduction in its Scope 3 greenhouse gas emissions in 2025 when compared to the 2019 baseline, keeping it on track to meet its goal of a 56% reduction by 2030. The company received an A-list rating from the CDP for climate and water initiatives throughout the year.
Looking forward, H&M projects a 2% sales decline in local currencies from December 1, 2025, to January 31, 2026. This forecast accounts for robust Black Friday sales but anticipates weaker demand in December and a negative calendar effect linked to the upcoming Chinese New Year. For 2026, capital expenditures are planned between SEK 9-10 billion, primarily for store upgrades and technology improvements, as well as the gradual rollout of new logistics solutions across Europe.
“Our work in 2025 has gradually contributed to positive development towards all our long-term targets. The sales trend is positive over the year as a whole, and earnings strengthened in the second half,” stated Daniel Erver, CEO of H&M.