H&M net profit jumps 52% in second quarter

Customers look at clothes at a H&M store in Paris, on April 18, 2024. (Photo by Antonin UTZ / AFP)

Stockholm, Sweden — H&M posted on Thursday a 52-percent jump in net profit for the second quarter as the world’s second biggest fashion retailer pressed on with efforts to control costs.

Chief executive Daniel Erver said the company had achieved its “best profit and cash flow for many years” in the April-to-June period, with profit after tax reaching five billion Swedish kronor ($473 million).

He said the group’s profitability performance was strong in the first half of the year thanks to “gradual improvements in sales development” and “continued good cost control”.

READ: Zara owner Inditex posts big profit despite Shein’s rise

Sales rose by three percent to 59.6 billion kronor at the world’s second biggest fashion retailer after Zara owner Inditex.

Its operating profit rose to seven billion kronor but it was lower than the 7.5 billion kronor expected by analysts surveyed by financial data firm FactSet.

“With a sharp increase in profit for four consecutive quarters, we are well on the way to achieving our long-term goal of profitability exceeding 10 percent over time,” Erver said.

“However, the conditions for achieving that level this year have become more challenging,” he said.

Erver said external factors that influence the group’s purchasing costs and sales revenues, including materials and foreign currency exchanges, “will have a more negative impact than we expected in the second half of the year”.

Sales in June are expected to fall by six percent compared to the same period last year as “unstable weather” hit many of the group’s large markets at the start of the month, H&M said.