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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 Group's Q4 and Full Year 2025 Results: A Strong Finish to a Challenging Year

H&M Group reported a 2% increase in sales in Q4, with operating profit rising 38% to a margin of 10.7%. For the full year, sales increased 2% in local currencies, and operating margin improved to 8.1%. Earnings per share grew 5% in 2025, coming in at 2.54, beating analyst estimates of 2.28. The company's gross margin improved 130 basis points year-over-year in Q4, driven by sourcing excellence initiatives. CFO Adam Karlsson highlighted that inventory productivity improved, with stock in trade relative to sales at 15.5% compared to 17.2% last year.

Publication Date: Feb -03

📋 Highlights
  • Profit Growth Acceleration:: Q4 operating profit surged 38% to a margin of 10.7%, up from Q3, driven by gross margin improvement and inventory productivity.
  • Sustainability Milestone:: CO2 emissions in Scope 3 fell by 30% since 2019, aligning with long-term environmental goals.
  • Inventory Efficiency Gains:: Stock-to-sales ratio declined to 15.5% in Q4 2025, down from 17.2% in 2024, boosting operational liquidity.
  • Strategic Financing:: Secured EUR 500 million 8-year bond at favorable terms, supporting 2026 investments in logistics and tech (SEK 9–10 billion CapEx).
  • 2026 Margin Targets:: Aims for 54–55% normalized gross margin and 10% operating margin, balancing pricing, promotions, and supply chain optimization.

Strategic Priorities and Investments

The company is focusing on offering great products, inspiring customer experiences, and building strong brands. Strategic priorities include strengthening product creation processes, improving demand planning, and developing customer experiences across channels. H&M launched its brand in Brazil and opened new stores in key locations, with plans to continue expanding into growth markets and investing in tech infrastructure. The company has an investment frame of SEK 9 billion to SEK 10 billion for 2026, which is lower than the previous year due to a lower level of closures and a higher share of new openings.

Outlook and Challenges

For 2026, H&M expects to grow sales and admin costs at low single-digit levels. However, weak consumer sentiment may drive increased need for temporary activations and deals. The company is also expecting currency volatility to continue to affect results. Despite these challenges, H&M is confident in its ability to achieve its long-term targets, with a focus on sustainability and reducing CO2 emissions. The company has reduced CO2 emissions in Scope 3 by 30% compared to 2019.

Valuation and Metrics

With a P/E Ratio of 23.32 and an EV/EBITDA of 9.75, H&M's valuation appears reasonable considering its growth prospects. The company's ROE (%) of 29.53 and ROIC (%) of 11.24 indicate strong profitability. Analysts estimate next year's revenue growth at 2.8%, which is slightly higher than the company's historical growth rate. The Dividend Yield (%) of 3.85% provides a relatively stable return for investors.

Operational Improvements

H&M is making significant investments in its logistic network and supply chain improvements, including consolidating its supplier base and improving forecasting demand. The company is also leveraging technology to enhance the customer experience, with a focus on agentic AI and conversational search. These investments are expected to drive long-term growth and improve profitability.

3. NewsRoom

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CEO TALKS: Iguatemi’s Ciro Neto on Brazil’s Retail Renaissance

Feb -19

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A Look At H & M Hennes & Mauritz (OM:HM B) Valuation After Recent Share Price Strength

Feb -12

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Sustainability Magazine’s Latest Issue Features Global Brands Redefining Fashion’s Impact

Feb -10

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Is Hennes & Mauritz (HNNMY) Stock Outpacing Its Retail-Wholesale Peers This Year?

Feb -09

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Lenzing Takes Majority Stake in TreeToTextile

Feb -03

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H&M Ups Dividend And Buybacks As Profitability Work Takes Center Stage

Jan -30

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E.l.f. Beauty Tests Brand Reach With First H&M Fragrance Collaboration

Jan -29

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H & M Hennes & Mauritz AB (HMRZF) Q4 2025 Earnings Call Highlights: Strong Profit ...

Jan -29

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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

Stock-Card
Van de Velde

A-Score: 6.9/10

Value: 5.6

Growth: 4.2

Quality: 7.9

Yield: 9.4

Momentum: 5.5

Volatility: 9.0

1-Year Total Return ->

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Stock-Card
Mercedes-Benz

A-Score: 6.7/10

Value: 8.7

Growth: 4.9

Quality: 3.3

Yield: 10.0

Momentum: 6.0

Volatility: 7.3

1-Year Total Return ->

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Stock-Card
VW

A-Score: 6.3/10

Value: 9.8

Growth: 3.4

Quality: 2.1

Yield: 9.4

Momentum: 6.5

Volatility: 6.7

1-Year Total Return ->

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Stock-Card
BMW

A-Score: 5.9/10

Value: 7.2

Growth: 5.6

Quality: 2.6

Yield: 8.1

Momentum: 6.5

Volatility: 5.7

1-Year Total Return ->

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Stock-Card
Inditex

A-Score: 5.2/10

Value: 1.6

Growth: 6.2

Quality: 8.1

Yield: 5.0

Momentum: 3.0

Volatility: 7.3

1-Year Total Return ->

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Stock-Card
H&M

A-Score: 5.2/10

Value: 3.9

Growth: 3.3

Quality: 5.2

Yield: 6.9

Momentum: 6.5

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

181.4$

Current Price

181.4$

Potential

-0.00%

Expected Cash-Flows