H&M's Q4 results beat our forecasts thanks to a strong gross margin. However, we kept our estimates largely intact and continue to see sales and margin improvement in 2025-26. We see earnings growth and dividends offering a reasonable expected return.

H&M will report its Q4’24 (September-November) results on Thursday at 8:00 am CEST. We expect slightly positive revenue growth both in local currencies and reported terms. However, we expect EBIT to decline year-on-year due to a slightly lower gross margin and stable opex/ sales. We expect a positive top line development for the beginning of the fiscal year 2025.

We believe consumer demand has remained subdued in H&M’s Q4 (Sep-Nov), although the strong September should support growth. We have lowered our margin assumptions for 2025 and beyond.

H&M released its Q3 report at the end of September. In this interview analyst Rauli Juva summarizes the main takeaway from the report.

H&M delivered weaker-than-expected earnings for Q3. While September sales growth was a positive data point, we see margin headwinds continuing in Q4 and do not expect the company to reach its 10% EBIT margin target in 2025 either.

H&M will report its Q3’24 (June-August) results on Thursday at 8:00 am CEST. We expect revenue growth to be slightly positive in local currencies, but negative in reported terms. We expect EBIT to decline y/y with a roughly stable gross margin and slightly higher opex with a negative sales trend hitting the earnings.

We believe H&M’s demand has remained sluggish in Q3, while the company faces several headwinds on the gross margin. H2 is set out to be softer than we previously expected, and we lower our estimates for 2024-2025. Analyst Rauli Juva summarizes.