H&M Q1 Earnings: Profit Rise Despite Sales Decline in Q1 2026

Hennes & Mauritz is getting ready to release its first-quarter earnings report. Sales are expected to go down, but profits should tell a more positive story. Analysts say that net profit will go up from 585 million kronor a year ago to 647 million kronor for the period from December to February.

Even though sales are expected to drop by 8.7% to 50.54 billion kronor, the company is still expected to make more money. This shows that the retailer is focused on being efficient and keeping costs down in a tough global retail environment.

There were a number of reasons why sales were expected to be lower. A strong Black Friday in late November brought forward demand, which made sales slow down in December. More problems came from careful inventory planning in the U.S., the changing date of the Lunar New Year, and weak consumer demand in major European markets.

However, February is expected to show signs of recovery, thanks to easier comparisons to the same month last year and a return to normal seasonal demand. In terms of local currency, overall sales growth is expected to stay about the same, but currency headwinds, especially a stronger Swedish krona, are likely to make the numbers look worse than they are.

On the other hand, margins are likely to get better. Analysts think that gross margin could rise to 50.0%, up from 49.1% last year. This is because shipping costs are going down, the supply chain is becoming more efficient, and the U.S. dollar is getting weaker. This improvement is expected to make up for the rising pressure from tariffs.

Operating profits are expected to increase to 1.33 billion kronor, and the operating margin is expected to increase to 2.6%. The investors will focus on what the company has to say regarding key areas, such as the U.S., where tariffs are an area of concern, and the Middle East, where performance is an area of concern. The earnings report has the potential to alter the perception of the company’s financial stability in the face of challenges across the world. The company’s shares have increased by nearly 29% over the past year.