Swedish fashion giant H&M reported a significantly stronger-than-expected third quarter, driven by solid consumer response to its autumn collections, though management cautioned that rising U.S. import tariffs could dampen margins going forward.

From June to August, H&M’s operating profit climbed to 4.91 billion Swedish crowns (≈ US$523 million), up from 3.51 billion a year earlier. Local-currency sales rose ~2%, and the company credited gains to improved product mix, tighter cost control, and better in-season full-price sell-throughs.

H&M’s net sales in reported currency declined to 57.0 billion crowns from 59.0 billion, but this was still slightly better than external expectations. Inventory levels dropped ~9%, reflecting stronger demand for items bought at full price and reduced reliance on markdowns.

Shares of H&M jumped ~10% in mid-morning trade following the results, bringing its year-to-date gains to about 16%.

However, the upbeat tone was tempered by caution: H&M warned that rising U.S. import tariffs could put pressure on margins in the upcoming quarter (through November). In response, H&M is exploring shifts in its supply chain—possibly sourcing more goods closer to the U.S. market (its second-largest by sales) to mitigate tariff effects.

CEO Daniel Erver, who took the helm in January 2024, is pushing a strategy to refresh styles and appeal more to fashion-conscious shoppers, aiming to compete more aggressively with fast-fashion rivals like Shein and Zara.

Analysts broadly reacted positively, noting the strong profit beat, healthier inventory, and resilient demand—though many flagged the tariff commentary as a risk worth watching.