H&M’s second-quarter results tell the story of a company choosing profitability over top-line growth. The Swedish fast-fashion giant reported net sales of 54.82 billion Swedish kronor for the period, a decline of roughly 3 percent year-on-year, as the retailer continued to close underperforming stores across Europe. The results, published on June 25, underscore the structural challenges facing traditional fast-fashion retailers in a market reshaped by Shein, Zara, and shifting consumer expectations.
The sales decline was driven in part by H&M’s ongoing store rationalization program. The company has been systematically reducing its physical footprint, closing locations in smaller markets and focusing investment on flagship stores and its online channel. The strategy has compressed revenue in the short term but improved inventory management and operating margins — operating profit held steady even as sales slipped.
H&M’s focus on margins reflects a broader strategic pivot under CEO Daniel Ervér. The company has moved away from the volume-driven model that defined its early decades, investing instead in higher-quality materials, more sustainable supply chains, and a tighter edit of seasonal collections. The strategy mirrors the approach taken by Inditex’s Zara, which has consistently outperformed H&M by maintaining tighter inventory control and a stronger brand perception.
Currency headwinds compounded the pressure. The strong Swedish krona weighed on H&M’s international earnings, particularly in markets where the brand generates significant revenue in weaker currencies. The company noted that sales in local currencies were broadly flat, suggesting the underlying business is stabilizing even as reported figures show a decline.
