On January 30, 2025, H&M reported a drop in shares by over 5% following the release of its fourth-quarter earnings. The Swedish fashion retailer missed sales forecasts despite a slight increase in full-year operating profit, highlighting ongoing challenges in a competitive market.
- H&M shares dropped over 5% after earnings.
- Fourth-quarter operating profit exceeded analyst predictions.
- Sales fell short of forecasts despite local currency growth.
- CEO expects improved consumer conditions in 2025.
- H&M faces tough competition from Zara and Shein.
- CEO Ervér appointed to drive company turnaround.
H&M’s recent earnings report revealed that the company generated an operating profit of 17.3 billion Swedish krona ($1.57 billion) for the year 2024, surpassing the 17.2 billion Swedish krona forecast by analysts. In the fourth quarter, H&M reported an operating profit of 4.6 billion Swedish krona, which was above the predicted 4.2 billion Swedish krona. However, sales for the fourth quarter fell short of expectations, totaling 62.19 billion Swedish krona compared to the 63.48 billion forecast in a Reuters poll, although this figure represented a 3% increase in local currencies.
– Key financial details include:
– Full-year operating profit: 17.3 billion Swedish krona
– Fourth-quarter operating profit: 4.6 billion Swedish krona
– Fourth-quarter sales: 62.19 billion Swedish krona
– Full-year sales: 234.58 billion Swedish krona, up 1% in local currencies
CEO Daniel Ervér attributed the fourth-quarter profit increase to strong online sales and successful women’s fashion collections, along with effective cost management. He expressed optimism about consumer pressure easing in 2025, despite ongoing macroeconomic challenges and geopolitical uncertainties. Ervér emphasized H&M’s diversified supply chain as a key factor in mitigating potential negative impacts on the business.
H&M continues to face stiff competition from rivals like Zara and fast-fashion brands such as Shein. The company had previously scrapped its earnings margin target for 2024 due to rising costs and heightened competition. These results mark a significant moment for CEO Ervér, who took on the role in January 2024 with the goal of revitalizing the brand.
The latest earnings report underscores H&M’s mixed performance, with a notable decline in share value despite achieving some profit growth. As the company navigates a competitive landscape, its focus on online sales and cost management will be critical for future success.
