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1. Company Snapshot

1.a. Company Description

H & M Hennes & Mauritz AB (publ) provides clothing, accessories, footwear, cosmetics, home textiles, and homeware for women, men, teenagers, children, and babies worldwide.It offers sportswear, shoes, bags, beauty products, and ready-to-wear; and interior products, including bed linens, dinnerware, textiles, furniture, and lighting.The company provides its products under the H&M, H&M HOME, COS, & Other Stories, Monki, Weekday, ARKET, Afound, Singular Society, Treadler, Creator Studio, and Sellpy brands.


As of November 30, 2021, the company had 54 online markets and approximately 4,801 stores in 75 markets, including franchise markets.H & M Hennes & Mauritz AB (publ) was founded in 1947 and is headquartered in Stockholm, Sweden.

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1.b. Last Insights on HM

H&M's recent performance was driven by a significant increase in third-quarter operating profit, exceeding market expectations. The company's turnaround efforts, led by CEO Daniel Erver, are paying off, with improved margins and effective cost control. A stronger customer offering and enhanced product range have contributed to the profit jump. Additionally, H&M's push into emerging markets like Brazil and India is expected to drive growth outside traditional strongholds. However, the company warned of higher tariff-related costs in the current quarter.

1.c. Company Highlights

2. H&M's Q3 Earnings: A Strong Performance Amidst Store Closures

H&M Group reported a 2% sales growth in local currencies for the third quarter of 2025, despite having 4% fewer stores compared to the same period last year. The company's operating profit increased to SEK 4.9 billion, corresponding to an operating margin of 8.6%, up from 5.9% in the same quarter last year. Earnings per share (EPS) came in at 1.98, beating analyst estimates of 1.54. The company's revenue growth was driven by a successful online store rollout and a well-executed summer sale, which contributed to a 9% decrease in inventory levels.

Publication Date: Sep -26

📋 Highlights
  • Sales Growth Despite Store Reduction:: Achieved 2% sales growth in local currencies with 4% fewer stores, driven by improved demand planning and summer sale success.
  • Operating Profit Surge:: Operating profit rose to SEK 4.9 billion (8.6% margin), up from 5.9% in Q3 2024, due to cost control and supply chain efficiencies.
  • Gross Margin Expansion:: Improved by 180 basis points YoY, though Q4 gains may decline due to higher import tariffs and U.S. price pressures.
  • Inventory Decline:: Reduced stock by 9% in SEK, bolstered by RFID adoption and optimized store visibility initiatives.
  • Supply Chain Cost Efficiency:: Cumulative 200 basis points improvement in buying costs from nearshore production and supplier collaboration.

Financial Performance

The company's gross margin improved by 180 basis points year-over-year in Q3, driven by supply chain improvements and positive external factors. However, H&M expects a slightly smaller positive impact in Q4 due to higher tariffs on imported goods. The company's digital sales are contributing strongly to profit growth, driven by both increased sales and initiatives to improve logistics and profitability within the digital segment.

Operational Highlights

H&M highlighted several key achievements, including the successful launch in Brazil, the opening of a new flagship store in Paris, and the participation of COS in New York Fashion Week. The company is also focusing on optimizing its store portfolio, with a focus on high-performing locations, and is excited about the opportunities in Latin America, particularly Brazil.

Valuation Metrics

With a P/E Ratio of 27.84, P/B Ratio of 7.6, and an ROE of 23.2%, the market is pricing in a certain level of growth and profitability for H&M. The company's Dividend Yield stands at 3.84%, indicating a relatively attractive return for investors. The EV/EBITDA ratio is 8.4, suggesting that the company's enterprise value is reasonable relative to its earnings before interest, taxes, depreciation, and amortization.

Supply Chain and Inventory Management

H&M is actively working on improving its supply chain responsiveness through nearshore production and closer collaboration with strategic suppliers. The company is also exploring initiatives like RFID technology to improve store visibility and reduce stock levels. They are focusing on demand planning and supply chain optimization, which has led to a 9% decrease in inventory levels.

Regional Performance

The company's portfolio brands experienced softness this quarter, largely due to the closure of Monki stores. However, they highlighted weekday's strong performance and the positive momentum within the COS brand. H&M remains confident in its growth potential, particularly in Latin America, and is excited about the opportunities ahead.

3. NewsRoom

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GXO Logistics, Inc. (GXO): A Bull Case Theory

Dec -04

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Assessing H&M (OM:HM B) Valuation After Its Recent Share Price Rebound

Dec -04

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Alpha Modus Files Patent Infringement Lawsuit Against H&M Over In-Store AI and Retail Intelligence Systems

Dec -03

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3 Reasons Growth Investors Will Love Hennes & Mauritz (HNNMY)

Dec -02

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Exclusive: Alpha Modus files patent infringement lawsuit against H&M USA

Dec -02

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‘We need to step up our game’: H&M caught in the middle of a fast-fashion battle

Nov -29

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How the Narrative Around H&M Is Evolving After Recent Analyst Upgrades and Strategic Initiatives

Nov -26

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Are Retail-Wholesale Stocks Lagging Hennes & Mauritz (HNNMY) This Year?

Nov -25

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4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (7.40%)

6. Segments

Apparel

Expected Growth: 7.4%

Increasing demand for affordable and trendy clothing, expansion in emerging markets and growing online presence will drive growth for H&M's clothing and accessories segment.

7. Detailed Products

Clothing for Women

H&M offers a wide range of clothing for women, including dresses, tops, trousers, jackets, and more.

Clothing for Men

H&M offers a variety of clothing for men, including shirts, trousers, jeans, jackets, and more.

Clothing for Kids

H&M offers a wide range of clothing for kids, including dresses, tops, trousers, and more.

Home Decor

H&M Home offers a range of home decor products, including textiles, furniture, and decorative items.

Beauty and Cosmetics

H&M Beauty offers a range of beauty and cosmetics products, including makeup, skincare, and fragrances.

Sustainable Fashion

H&M Conscious offers a range of sustainable fashion products, including clothing made from recycled materials and organic cotton.

Plus Size Clothing

H&M+ offers a range of plus-size clothing for women, including dresses, tops, trousers, and more.

Maternity Wear

H&M Maternity offers a range of maternity wear, including dresses, tops, trousers, and more.

8. H & M Hennes & Mauritz AB (publ)'s Porter Forces

Forces Ranking

Threat Of Substitutes

H&M faces moderate threat from substitutes, as customers have various alternatives for fashion apparel, such as online marketplaces, fast-fashion retailers, and second-hand shopping. However, H&M's strong brand recognition and affordable prices help mitigate this threat.

Bargaining Power Of Customers

H&M's customers have significant bargaining power due to the abundance of fashion retailers and online shopping options. This forces H&M to maintain competitive pricing and invest in customer loyalty programs.

Bargaining Power Of Suppliers

H&M has a diversified supplier base, which reduces the bargaining power of individual suppliers. Additionally, H&M's large scale of operations and long-term contracts with suppliers further mitigate supplier bargaining power.

Threat Of New Entrants

The fashion industry has high barriers to entry, including significant capital requirements, complex supply chains, and established brand recognition. These barriers make it challenging for new entrants to compete with H&M's scale and brand presence.

Intensity Of Rivalry

The fashion industry is highly competitive, with numerous established players and new entrants vying for market share. H&M faces intense rivalry from competitors like Zara, Uniqlo, and online retailers, which drives the need for continuous innovation and competitive pricing.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 38.09%
Debt Cost 4.27%
Equity Weight 61.91%
Equity Cost 10.35%
WACC 8.03%
Leverage 61.54%

11. Quality Control: H & M Hennes & Mauritz AB (publ) passed 6 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Van de Velde

A-Score: 6.8/10

Value: 5.9

Growth: 4.2

Quality: 7.4

Yield: 9.4

Momentum: 5.5

Volatility: 8.3

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BMW

A-Score: 6.3/10

Value: 9.1

Growth: 5.6

Quality: 2.5

Yield: 8.8

Momentum: 6.5

Volatility: 5.7

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VW

A-Score: 6.3/10

Value: 10.0

Growth: 3.6

Quality: 2.4

Yield: 10.0

Momentum: 5.0

Volatility: 7.0

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Mercedes-Benz

A-Score: 6.3/10

Value: 8.9

Growth: 4.9

Quality: 3.3

Yield: 10.0

Momentum: 3.5

Volatility: 7.3

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Inditex

A-Score: 5.9/10

Value: 3.6

Growth: 6.2

Quality: 8.6

Yield: 6.2

Momentum: 3.0

Volatility: 8.0

1-Year Total Return ->

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H&M

A-Score: 4.9/10

Value: 3.8

Growth: 3.3

Quality: 5.1

Yield: 6.9

Momentum: 5.0

Volatility: 5.3

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

176.6$

Current Price

176.6$

Potential

-0.00%

Expected Cash-Flows