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.

We believe H&M’s demand has remained sluggish in Q3, while the company faces several headwinds on the gross margin. We expect these to result in H2 being weaker than we previously expected and have hence lowered our estimates for 2024-25.

H&M’s Q2 was strong as sales grew and EBIT improved y/y and topped our forecasts, although they were in line with the consensus. H&M, however, sees more headwinds in H2 than previously and hence its EBIT margin target of 10% looks more challenging for this year, according to the company.