H&M reported 54.82 billion kronor in second-quarter revenue, down 3.3 percent from a year earlier as a stronger Swedish kronor and weak European demand hit reported sales. The chain still posted flat local-currency sales, leaving shareholders with a cleaner read on operations but a weaker top line.
54.82 billion kronor compared with 56.71 billion kronor a year earlier is the number that matters most. Daniel Ervér said H&M is “still not yet where we want to be when it comes to sales,” and added that the company wants to “pick up speed in how we improve the customer offer.”
Daniel Ervér on sales
“We are still not yet where we want to be when it comes to sales, looking at the quarter, it came in fairly in line with last year’s sales,” Ervér said in a call with analysts Thursday after the results were released. The line captures the split in the quarter: the company is not getting the sales growth it wants, but it is also no longer showing the same distance from last year in local currencies.
3.3 percent was the reported sales decline, and H&M said the currency move was a major reason. That means the translation into kronor cut the headline figure even though demand in local terms was relatively steady, a useful distinction for investors trying to separate operating performance from exchange-rate noise.
Stockholm cuts and store exits
3 percent fewer stores than a year earlier is the other hard number in the quarter. H&M kept closing underperforming locations while Ervér overhauled the organization, including middle management cuts at the Stockholm headquarters, as part of a broader effort to move decision-making closer to the customer.
“The purpose for this is to move decision-making much closer to the customer, to become more relevant in each market,” Ervér said. “But also pick up speed in how we improve the customer offer.” The practical effect is a tighter operating model: fewer stores, fewer layers, and more pressure on each market to respond faster.
Margins rose as sales lagged
Operating profit rose in the second quarter excluding one-off restructuring costs, while margins improved and inventory levels came down. That combination gives H&M some room to show progress even without stronger sales, but it also leaves the turnaround dependent on whether the company can turn a cleaner cost base into stronger demand.
Demand remained uneven across geographic regions and product categories, so the next test is whether the tighter store base and faster decision-making can turn flat local-currency sales into growth without relying on currency translation. If that does not happen, the company’s improving profitability will keep running ahead of its revenue line.
