STOCKHOLM ― Swedish fashion retailer H&M reported on Thursday a forecast-beating jump in September-November profit helped by lower costs, but flagged a drop in December-January local-currency sales.
Operating profit in H&M's fiscal fourth quarter, which includes the crucial Black Friday weekend, was 6.36 billion crowns ($723.5 million) against a year-earlier 4.62 billion and a mean forecast in an LSEG poll of analysts of 5.53 billion, on an organic sales increase of 2 percent. The operating margin widened to 10.7 percent from 7.4 percent a year ago.
"Through a strengthened customer offering, good cost control and improved inventory productivity, we continue to take important steps towards all our long-term targets in a challenging environment" CEO Daniel Erver said in a statement.
The rival to Zara-owner Inditex said it sees December and January sales measured in local currencies down 2 percent. It said strong sales during Black Friday in November led to subdued demand in December, and Chinese New Year falling in February also weighed.
Analysts had expected sales to grow at a sluggish pace in the fourth quarter as consumers in many markets continue to hold tightly to their purses.
H&M has struggled to expand its sales as online retailers like Shein attract shoppers with ultra-low prices while bigger competitor Zara dominates the upmarket end of fast fashion.
While investors welcomed an improvement in H&M's margins in September, analysts have said that a turnaround at the company ultimately comes down to Erver showing he can also reignite the group's sales.
H&M proposed a dividend of 7.10 crowns per share for 2025 against 6.80 crowns for 2024, above an expected 6.83 crowns in the LSEG poll.