Shares of H&M fell on Thursday as the world’s second-largest retailer missed sales forecasts in the fourth quarter. Sales for the Swedish fashion giant totaled 62.19 billion Swedish krona in the last three months of the year, slightly below the 63.48 billion forecast in a Reuters poll, but showing a 3% increase in local currencies. The company attributed the sales shortfall partly to the delayed Black Friday, but noted that sales improved in December and January, marking a positive start to the new fiscal year.
For the full year of 2024, sales increased by 1% in local currencies, reaching 234.58 billion Swedish krona, mainly driven by the women’s wear, sportswear, and online segments. Operating profit for the year slightly exceeded expectations, with H&M reporting an operating profit of 17.3 billion Swedish krona ($1.57 billion) for 2024, compared to the 17.2 billion Swedish krona forecast by analysts in an LSEG poll. In the fourth quarter, operating profit was 4.6 billion Swedish krona, surpassing the 4.2 billion Swedish krona predicted by analysts.
H&M’s shares closed more than 3% lower on Thursday. CEO Daniel Ervér stated that the fourth-quarter increase in sales and operating profit was driven by strong online sales, well-received women’s fashion collections, and effective cost management. Looking forward, Ervér anticipated a reduction in consumer pressure in 2025 and expressed confidence in the company’s ability to handle any negative impacts from international trade.
Despite facing competition from Zara and Shein, H&M remains focused on long-term growth. The company abandoned its earnings margin target for 2024 due to rising costs and heightened competition in the third quarter. Ervér, who took on the CEO role in January 2024, aims for long-term sales growth of at least 10% annually, an operating margin exceeding 10%, and a 56% reduction in greenhouse gas emissions by 2030 compared to 2019 levels. He expressed satisfaction with the progress made so far and highlighted the potential for further growth.
