H&M Struggles with Exchange Rate Effects: 22% Profit Decline in Second Quarter
Stockholm, donderdag, 26 juni 2025.
Swedish fashion retailer H&M has experienced a challenging period with a significant 22% profit decline in the second quarter. Exchange rate fluctuations, higher procurement costs due to the more expensive US dollar, and rising freight costs were the primary causes. Despite these headwinds, CEO Daniel Ervér reported a slight 1% revenue increase in local currencies and a positive sales development in June. H&M continues to invest in customer offerings and brand strategy, with plans to close 200 stores and open 80 new ones, while focusing on improving profitability in the second half of the year.
H&M Financial Results
Swedish fashion retailer H&M reported on Thursday a significant 22% profit decline in the second quarter of 2025. This downturn was primarily caused by unfavourable exchange rate effects, higher procurement costs, and the more expensive US dollar [1][2][3].
Revenue and Operational Challenges
Despite challenging market conditions, H&M managed to achieve a small 1% revenue increase in local currencies [4]. The operating profit declined to 5.9 billion Swedish krona, representing an operating margin of 10.4% compared to 11.9% in the previous year [2][5].
CEO Daniel Ervér’s Strategic Approach
CEO Daniel Ervér emphasised that the company continues to invest in customer offerings and brand strategy. As part of the restructuring, H&M plans to close 200 stores, primarily in established markets, and open 80 new stores in growth markets [6].
Future Expectations
H&M expects that the external factors negatively impacting procurement costs in the first half of the year will be more positive in the second half. In June, the company already saw a 3% sales increase in local currencies [4][5].