H&M profits surge 61% as cost-saving measures bear fruit

H&M has announced that its profit after tax rose 61% to SEK 7bn (£524m) for the nine months ended 31 August 2023.

Furthermore, its gross profit increased to SEK 87bn (£6.5bn) which corresponds to a gross margin of 50.3%.

The company’s operating profit increased to SEK 10.2bn (£764m), corresponding to an operating margin of 5.9%.

In 2022 one-time costs for Russia of SEK 1.8bn (£135m) were charged against the nine-month result.

Adjusted for these one-time costs the increase compared with the previous year was 26%.

Alongside this, the group’s net sales increased by 8% to SEK 173.4bn (£12.9bn) but net sales were flat in local currencies.

In Q3 alone the company posted a profit after tax of SEK 3.3bn (£250m) with a gross profit of SEK 31bn (£2.3bn).

Helena Helmersson, CEO, said: “During the quarter the focus has been on profitability and inventory efficiency, resulting in strong cash flow and good profit development. We are taking further steps towards our goals and creating good conditions for profitable growth over time.

“Sales in the third quarter started strongly with pent-up demand for summer garments following a cold May in most of our major markets. The effect then gradually decreased during the summer.”

She added: “There was a weaker end to the quarter, with comparative figures affected by the temporary reopening in Russia in August last year. Having now moved into September, we can see that the start of the autumn season has been delayed because the month so far has been marked by unusually hot weather in many of our European markets.

“In times of high inflation where household living costs are rising significantly it is more important than ever to offer customers the best price and unbeatable value for money. Our highest priority remains the customer offering, where work to improve the assortment and the customer experience is making progress, alongside further integration of the two channels.”