H&M Posts Strong Q3 Profit Boost, Warns of U.S. Tariff Impact

Swedish fashion giant H&M reported a stronger-than-expected 40% rise in third-quarter operating profit, reaching 4.91 billion Swedish crowns ($523 million) for the June-August period, up from 3.51 billion a year earlier. Shares in the world’s second-largest listed apparel retailer surged 10% to an 11-month high, driven by improved product mix, tighter cost controls, and solid demand for autumn collections.

CEO Daniel Erver, who took charge in January 2024, has been steering H&M toward profitability through trend-focused designs and high-profile marketing campaigns. The retailer recently brought in pop stars Charli XCX and Tyla for its refreshed branding push, while also staging its first fashion catwalk show since 2018 during London Fashion Week. Analysts welcomed the results, noting a 9% drop in inventory levels as more customers bought items at full price rather than waiting for end-of-season discounts.

Despite the upbeat quarter, H&M cautioned that U.S. tariffs could pressure margins in the coming months, with consumer sentiment also under strain. While rivals raise prices in response to tariffs, the company plans a cautious strategy—keeping entry-level prices steady for basics and children’s wear while making selective increases elsewhere. The U.S., H&M’s second-largest market after Germany, accounted for 13% of sales last year.

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