H&M profit falls but sees tailwinds ahead

Hennes & Mauritz reported a drop in second-quarter profit, citing higher purchasing costs and unfavorable currency movements, but said it expects these headwinds to reverse in the second half of the year.

The Swedish fashion retailer said operating profit for the three months ended May 31 fell to 5.91 billion Swedish kronor, down from 7.10 billion kronor in the same period last year.

Net sales declined to 56.71 billion kronor from 59.61 billion kronor, though sales in local currencies rose 1%, the company said.

H&M attributed the profit decline to a lower gross margin, which was negatively affected by a more expensive U.S. dollar and high freight costs.

However, the company said that the external factors that negatively impacted purchasing in the first half of the year are turning positive for the second half.

"Our plan, with its focus on the product offering, the shopping experience and brand, is again confirmed by the progress we see," said CEO Daniel Ervér.

The company also said it expects sales in June to increase by 3% in local currencies compared with the previous year and plans to launch in Brazil in the second half of 2025.