Q4 Sales Fall Below Expectations

H&M Hennes & Mauritz AB reported a mixed set of results for the fourth quarter of 2024, with sales missing analyst expectations. The company posted sales of 62.19 billion Swedish krona, falling short of the anticipated 63.48 billion krona. However, this marked a 3% growth in local currencies.

Full-Year Operating Profit Beats Forecasts

For the full year, H&M recorded an operating profit of 17.3 billion Swedish krona ($1.57 billion), slightly exceeding analyst projections of 17.2 billion krona. Fourth-quarter operating profit also outpaced forecasts, reaching 4.6 billion krona compared to the expected 4.2 billion krona. This improvement was attributed to effective cost controls and strong online sales.

Improved Margins Amid Competition

H&M’s gross profit for the quarter rose to 33.94 billion krona, delivering a gross margin of 54.6%, up from 53.7% a year earlier. Despite intense competition from rivals like Zara and Shein, the company’s focus on popular women’s fashion and online channels has supported profitability.

Black Friday Timing and Market Challenges

The late timing of Black Friday sales in 2024 likely impacted revenue during the critical holiday season. Moreover, rising costs and competitive pressures led H&M to abandon its profit margin targets earlier in the year.

CEO’s Strategy for Growth

Newly appointed CEO Daniel Ervér, who assumed leadership in January 2024, has prioritized cost management and strategic investments to guide H&M through challenging market conditions. His focus is on revitalizing the company’s core business areas and driving sustainable growth.