𝓤𝓷𝓲𝓽𝓮𝓭 𝓝𝓮𝔀𝓼

Fast fashion retail giant H&M has brushed off a “challenging environment” to deliver a jump in annual earnings, but revealed a recent sales slowdown amid subdued shopper demand over Christmas.

The Swedish group reported a 6% rise in operating profits of 18.4 billion Swedish krona (£1.5 billion) for the year to November 30, thanks to a 38% surge in its final quarter as it benefited from strong Black Friday trading.

Sales in local currencies rose 2% over the year and across its fourth quarter.

But it cautioned that it expects net sales in local currencies to drop 2% year-on-year in the two months to the end of January.

It said the decline “should be seen in the light of strong sales during the Black Friday week at the end of November, which led to subdued demand in a number of markets in December”.

The group – the world’s second largest stock market-listed fashion firm – added there is also set to be a knock to sales in February due to a “negative calendar effect associated with the Chinese new year”.

It added: “The company is closely monitoring developments in global trade and trade restrictions.

“With good flexibility in the supply chain and through the pricing of the customer offering, there are opportunities to adapt the business to changed conditions.”

Online sales continued to “perform well”, according to the chain, with just over 30% of sales now made via the internet.

H&M said it ended its financial year with 4% fewer stores, at 4,101, while its global workforce shrunk by nearly 2% to 94,744.

The closures and a number of shop revamps had a “negative impact on sales” last year, although it expects its store estate overhaul to have a “slightly positive” effect on sales in 2026.

Chief executive Daniel Erver said: “Through a strengthened customer offering, good cost control and improved inventory productivity, we continue to take important steps towards all our long-term targets in a challenging environment.”

The start of the new year has been marked by continued geopolitical and economic uncertainty, which underlines the importance of an efficient organisation with short decision paths that operates close to the customer and has a high degree of flexibility and continued good cost control, he added.

Robyn Duffy, consumer markets senior analyst at RSM UK, said the annual profit rise was better than forecast.

“H&M’s fourth quarter performance marks a clear inflection in profitability, with margin discipline and cost control delivering a meaningful earnings beat despite uneven demand.

“The focus now shifts to 2026, where the test will be whether those margin gains can be protected as sales remain sensitive to consumer confidence, particularly in Europe and the US.”