H&M stock slides as tepid growth outlook offsets Q3 profit beat
September 24, 2026
H&M stock fell sharply on Thursday after the Swedish fashion retailer reported stronger-than-expected third-quarter earnings, but a subdued sales outlook raised concerns about the company’s growth prospects.
H&M shares declined more than 3% following the results, as investors focused on the retailer’s cautious outlook for September sales despite a significant improvement in operating profit and gross margin.
H&M Q3 Earnings Beat Expectations
H&M reported third-quarter operating profit of 6.04 billion Swedish crowns ($608.63 million) for the June-August period, up from 4.91 billion crowns during the same quarter a year earlier.
The result comfortably exceeded the 5.14 billion crowns average forecast from analysts surveyed by LSEG, highlighting the impact of H&M’s ongoing cost-control measures, improved purchasing and operational efficiency.
The company also reported a notable improvement in profitability. H&M’s gross margin increased to 54.0% from 52.9%, beating the 53.4% expected by analysts.
The stronger gross margin came despite the comparison with a year-earlier period that benefited from one-off tariff-related gains.
H&M Stock Falls Despite Strong Profit Growth
Despite the better-than-expected H&M earnings results, H&M stock came under pressure, with shares falling more than 3% as investors shifted their attention toward the retailer’s sales growth outlook.
H&M said sales in the third quarter increased by just 1%, while the company expects September sales to rise by approximately 1% in local currencies.
The modest sales forecast reinforced concerns about weak consumer demand and limited top-line growth in the global fashion retail market.
For investors tracking H&M stock price movements and H&M earnings, the contrast between improving profitability and sluggish sales growth has become a key focus.
Cost Controls Support H&M Profitability
H&M Chief Executive Officer Daniel Erver said improvements in purchasing, cost control and operational efficiency helped support the company’s stronger financial performance.
The retailer continues to focus on improving its cost structure while seeking opportunities to increase sales.
However, H&M noted that higher freight costs had a slightly negative impact on purchasing costs during the quarter. Markdown costs remained broadly unchanged from the previous year.
Currency movements related to intragroup payables and receivables had a neutral impact on the company’s gross margin, compared with the previous year when exchange-rate gains provided additional support.
H&M Warns of Higher Costs in Fourth Quarter
Looking ahead, H&M expects external factors to have a somewhat negative impact during the fourth quarter compared with the same period last year.
The company also expects markdown costs as a percentage of sales to increase slightly.
H&M attributed the expected increase partly to a longer and more extensive pre-Black Friday promotional campaign this year. The company also noted that Cyber Monday will take place in November, potentially affecting the timing and level of promotional activity.
Higher promotional activity could put additional pressure on margins as H&M enters the important holiday shopping season.
H&M Sales Outlook Remains a Key Investor Concern
While the latest H&M Q3 results demonstrated stronger profitability, the company’s limited sales growth remains a major issue for investors.
The combination of a profit beat, higher gross margins and weak sales guidance created a mixed picture for H&M shares.
H&M’s ability to accelerate sales growth while maintaining improved margins will likely remain an important factor for the company’s financial performance and stock market valuation.
H&M Stock: Key Takeaways for Investors
H&M Q3 operating profit: 6.04 billion Swedish crowns
Previous-year operating profit: 4.91 billion crowns
Analyst forecast: 5.14 billion crowns
Q3 gross margin: 54.0%
Previous-year gross margin: 52.9%
Q3 sales growth: 1%
September sales outlook: approximately 1% growth in local currencies
H&M shares: fell more than 3% following the earnings release
Key focus: sales growth, margins, cost control and promotional activity
What’s Next for H&M Stock?
The latest H&M earnings report shows that the company is making progress in cost management, purchasing efficiency and profitability, but investors remain focused on its ability to generate stronger sales growth.
For the H&M stock outlook, upcoming sales figures and the retailer’s performance during the Black Friday and holiday shopping period could be particularly important. Investors will also be watching whether H&M can maintain its improved gross margin while managing freight expenses, markdowns and promotional costs.
H&M stock remains closely tied to the broader outlook for global fashion retail, consumer spending and the company’s ability to balance profitable growth with competitive pricing.