H&M profit beats estimates on tariff refunds and higher margins

H&M REPORTED better-than-expected earnings as improved margins and refunds of US tariffs helped the Swedish fashion retailer offset a modest growth in sales.

Hennes & Mauritz’s operating profit rose to 6.04 billion kronor (US$609 million) in the three months through August, the company said in a statement on Thursday (Sep 24).

That beat the 5.27 billion kronor average estimate from analysts compiled by Bloomberg. Fiscal third quarter sales rose to 57.189 billion kronor, compared with a 57.3 billion-kronor estimate, up 1 per cent in local currencies. 

The Stockholm-based retailer said sales in September, the first month of its fiscal fourth quarter, are expected to rise 1 per cent from a year earlier in local currencies, giving an early read on how its fall collections are being received by shoppers.

Fashion retailers have been hurt as consumers contending with a cost of living crisis have pulled back, putting pressure on margins amid intensifying competition and geopolitical tensions.

But H&M has emerged leaner from years of cost cutting, with tighter inventories, fewer markdowns and a more responsive supply chain helping it rebuild profitability. 

That said, chief executive officer Daniel Ervér has struggled to deliver consistent sales growth, leaving H&M trailing larger Spanish rival Inditex.

The Zara owner recently disappointed on profit after rising logistics and distribution costs weighed on earnings.

H&M said gross margins for the quarter was helped by one-time effects of about 1.6 percentage points from tariffs and goods imports that had increased the cost of goods sold in previous quarters.

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Analysts had flagged the tariff payments as a potential boost to reported profit that would not reflect an improvement in the underlying business.

Before Thursday, H&M shares had dropped more than 10 per cent in 2026 so far. BLOOMBERG