By H&M, one of the world’s leading fashion retailers, posted a third-quarter earnings beat, yet tempered optimism with a warning about rising U.S. import tariffs.
Operating profit reached 4.91 billion Swedish crowns, significantly ahead of consensus estimates (~3.68 billion crowns). The company cited a 2% rise in local-currency sales, tighter cost control, and stronger full-price sales as key drivers.
While nominal sales fell to 57.0 billion crowns from 59.0 billion, the result slightly outpaced expectations. H&M also achieved a ~9% reduction in inventory, signaling increased efficiency and less reliance on markdowns.
H&M’s shares surged ~10% on the news.
Yet caution prevailed: the company cautioned that tariffs on imports could dampen margins in the fourth quarter. In anticipation, H&M is evaluating changes to its sourcing strategy, possibly bringing production closer to U.S. markets.
Under new CEO Daniel Erver, H&M has been shifting toward trendier collections and more fashion-forward appeal to compete with fast-fashion peers.
Analysts praised the strong results and better inventory management but emphasized that tariff pressures and cost inflation remain material risks.