Robyn Duffy, Consumer Markets Senior Analyst at RSM UK, comments on today’s results from H&M: “H&M Group delivered another material earnings surprise in Q4, with operating profit up 38% year-on-year and operating margin expanding to 10.7%, comfortably ahead of expectations. This was driven by gross margin expansion and tight cost control, alongside improved collections that supported 2% sales growth in local currencies, despite a 4% smaller store base.

“H&M’s Q4 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.

“On the outlook, H&M expects sales between 1 December and 31 January to decline by 2%, reflecting subdued demand across key markets and a pull-forward of spend into a strong Black Friday at the end of November. This points to a softer start to the new financial year, with value-seeking behaviour and low consumer confidence continuing to weigh on demand in the early part of FY26.

“The strategic question now is whether H&M can compete more meaningfully with the likes of Zara to improve top line growth. As Primark and Shein continue to take share at the value end of fast fashion in Europe, Zara remains H&M’s closest like-for-like benchmark. Closing that gap will require a sharper fashion proposition and a more disciplined, less expansive product range.”

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