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H&M Group reports SEK 3,5 billion in operating profit in Q3 2024, a 26% decline year-over-year
Sectors & Markets
29 October, 2024
Table of contents
On 26 September 2024, H&M Hennes & Mauritz AB released its nine-month report for the financial period from 1 December 2023 to 31 August 2024, highlighting the results for Q3, spanning from 1 June 2024 to 31 August 2024. H&M’s third-quarter net sales reached SEK 59,0 billion, slightly below SEK 60,9 billion in the same period of 2023, translating to flat sales growth in local currency. Despite external pressures, H&M achieved a gross margin of 51,1% for Q3 2024, an increase from 50,9% in Q3 2023, attributable to effective supply chain management.
The quarter's operating profit was SEK 3,5 billion, a decline from SEK 4,7 billion in Q3 2023, reducing the operating margin to 5,9% from 7,8% due to currency impacts and costs associated with winding down the Afound brand. Without these effects, the operating margin remained comparable to the previous year. The following table outlines key financial indicators for Q3 2024 compared to Q3 2023:
| Financial KPI | Q3 2024 (SEK m) | Q3 2023 (SEK m) | Growth/Decline (%) |
|---|---|---|---|
| Net Sales | 59.011 | 60.897 | -3,1% |
| Gross Profit | 30.133 | 31.015 | -2,8% |
| Gross Margin (%) | 51,1 | 50,9 | +0,2 pp |
| Operating Profit | 3.507 | 4.739 | -26,0% |
| Operating Margin (%) | 5,9 | 7,8 | -1,9 pp |
| Cash Flow from Operations | 8.215 | 12.257 | -32,9% |
The group’s geographical performance revealed both resilience and areas for growth. Western Europe, a core region, saw a 4% decline in SEK, while Eastern Europe reported a 10% increase. Asia, Oceania, and Africa presented a 4% decrease over the nine-month period, influenced by economic headwinds and currency variations. North and South America recorded a 2% decline in sales. Below is a breakdown of Q3 2024 performance by region compared to Q3 2023:
| Region | Q3 2024 Sales (SEK m) | Q3 2023 Sales (SEK m) | % Change in SEK | % Change in Local Currency |
|---|---|---|---|---|
| The Nordics | 5.313 | 5.809 | -9,0% | -7,0% |
| Western Europe | 19.731 | 20.581 | -4,1% | -2,0% |
| Eastern Europe | 5.417 | 5.306 | +2,1% | +4,0% |
| Southern Europe | 8.252 | 8.206 | +0,6% | +8,0% |
| North & South America | 13.124 | 13.445 | -2,4% | +2,0% |
| Asia, Oceania, Africa | 7.174 | 7.550 | -5,0% | -2,0% |
H&M Group continues to prioritise sustainability, advancing its circularity efforts and environmental commitments. The group’s sustainable practices include substantial use of recycled materials, nearshoring initiatives, and energy sourcing predominantly from renewable sources. Key ESG metrics and achievements for Q3 2024 include:
| ESG Metric | Q3 2024 Value | Goal |
|---|---|---|
| Share of Recycled/Organic Materials (%) | 50 | 100% by 2030 |
| Renewable Energy Usage in Operations (%) | 90 | 100% by 2030 |
| CO₂ Emission Reduction (Scope 1 & 2, %) | 22 | 100% by 2040 |
Circular Fashion and Sustainable Sourcing
The Let’s Close the Loop
programme has been a major success, enabling consumers to recycle unwanted garments at H&M stores. The group also introduced resale and repair services in select markets, aiming to meet the growing demand for sustainable fashion while contributing to waste reduction.
Future ESG Goals
H&M has committed to having all its products made from either recycled or sustainably sourced materials by 2030, alongside a fully renewable energy-powered operation. This focus on a circular economy is complemented by initiatives in responsible water management, particularly in high-risk regions, ensuring efficient resource use throughout its supply chain.
H&M’s Q3 2024 results demonstrate its resilience despite macroeconomic and currency challenges. While net sales remained flat in local currency, improvements in gross margins and strategic investments reflect a commitment to long-term growth. H&M’s ESG initiatives and omnichannel approach, alongside digital expansion in China and physical presence in new markets, position it well for future profitability and brand equity enhancement.
Further analysis could delve into individual brand profitability, evaluate marketing ROI across platforms, and track sustainability initiatives’ impact on brand loyalty. Monitoring these areas may offer valuable insights into H&M’s adaptive strategies and growing emphasis on environmental responsibility.
Read the full H&M Group report Here.
Cover Image Courtesy: H&M Website