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The Swedish H&M Group saw its group revenue decrease by 1 % both in the fourth quarter and over the entire year. Nevertheless, the company managed to raise its profit. After a challenging period, the fashion giant believes it is back on the right track.
Slow but profitable year-end
In the fourth quarter, H&M’s net revenue dropped slightly to 62.2 billion Swedish kronor (5.4 billion euros), despite a 4 % growth in December. The late timing of Black Friday meant that much of its revenue was recorded in December, unlike the previous year.
The gross margin slightly increased from 53.7 % to 54.6 %, with gross profit rising to 33.9 billion Swedish kronor (2.9 billion euros). Operating profit nearly doubled to 4.6 billion Swedish kronor (400 million euros).
Halting acquisitions and innovation
For the full fiscal year 2024, net revenue dropped 1 % to 234.5 billion Swedish kronor (20 billion euros). The group’s renewed focus on women’s clothing and the flagship H&M brand has already shown positive results, CEO Daniel Ervér said. Operating profit increased 28 % to 17.3 billion Swedish kronor (1.5 billion euros), with an operating margin of 7.4 %.
The fashion giant plans to focus on organic growth and will temporarily reduce investments in new business models. This is noteworthy, as the group expanded through strategic collaborations and innovations in recent years – such as establishing its own test hub in Berlin. Many of these projects are now being discontinued; for instance, Monki has been integrated into Weekday, and outlet platform Afound has been sold.
One billion euros in investments
Still, the company plans to invest one billion euros, focusing on enhancing the shopping experience and optimising logistics. By the end of the year, the first Brazilian H&M store is set to open in São Paulo. Last year, the group invested primarily in supplier collaboration, shortening product development cycles and increasing RFID technology usage. The retailer also opened 88 new stores.
Ervér remains optimistic about growth prospects despite macroeconomic and geopolitical uncertainties. “After one year as CEO, I’m confident that we are on the right track. We have set a clear direction focusing fully on our core business: improving what makes the biggest difference for the customer and removing what doesn’t.”
