H&M reported a modestly better-than-anticipated increase in operating profit for 2024, despite missing sales forecasts in the fourth quarter. The Swedish fashion retailer announced an operating profit of 17.3 billion Swedish krona ($1.57 billion), slightly exceeding analysts’ predictions of 17.2 billion Swedish krona. However, sales in the fourth quarter fell short of expectations, totaling 62.19 billion Swedish krona against a forecast of 63.48 billion Swedish krona.
The company's fourth-quarter operating profit was 4.6 billion Swedish krona, outperforming analysts’ estimates of 4.2 billion Swedish krona. This uptick marks a slight victory for H&M amid its ongoing struggles to maintain a competitive edge against rivals such as Inditex-owned Zara and cost-effective retailers like Shein.
Overall, H&M's sales for 2024 increased by 1% in local currencies to reach 234.58 billion Swedish krona. In the fourth quarter alone, sales rose by 3% in local currencies. Despite these gains, the company faced challenges, leading to the decision to scrap its earnings margin target for the year due to rising costs and intensifying competition.
Daniel Ervér, who took over as CEO in January 2024, has been tasked with steering the company towards a turnaround. His leadership is seen as critical during this phase, as H&M seeks to leverage its strengths and address market pressures.
"Sales and operating profit increased in the fourth quarter driven by strong online sales, well-received women's fashion collections and effective cost control. By focusing on our core business and delivering on our plan, we are on track towards long-term, profitable growth." – CEO Daniel Ervér
Ervér's approach emphasizes strengthening H&M's core business and enhancing its online sales platform, which played a significant role in boosting the company's recent performance. The success of women’s fashion collections also contributed positively, alongside strategic cost management.