PARIS – Swedish fast-fashion giant H&M Group reported a dip in first-quarter sales, with store closures and revamps weighing on growth as the company moves through a period of transition.
Sales for the three months to Feb. 28 fell 1 percent in local currencies, in part due to a reduced retail footprint following a wave of closures over the past year. At the end of the quarter, the group operated 163 fewer stores than a year earlier, or about 4 percent fewer, driven in part by the decision to shutter all of its Monki brand physical locations.
The closures highlight a deliberate shift in strategy as H&M prioritizes productivity and brand elevation over sheer scale. While the move has pressured top-line growth in the near term, the company touts the changes as necessary to support a more focused and efficient business model.
Sales were hit harder in Swedish krona, down 9 percent in the quarter due to the strengthening home currency.
“The quarter began in December with weaker demand following strong Black Friday trading in November. Towards the end of the quarter, our well-received spring collections contributed to a positive sales trend, which also continued into March,” said chief executive officer Daniel Erver.
He framed the quarter as part of a longer-term repositioning effort, with improvements in product, customer experience and brand strength. “We are continuing to focus on strengthening our core offering and creating a more inspiring shopping experience,” he said, pointing to ongoing investments across both physical stores and digital channels.
Erver added that the company remains focused on long-term growth, even as near-term sales reflect the impact of structural changes. “The actions we are taking are creating the conditions for profitable growth over time,” he said.
Looking ahead, the group plans to close an additional 160 stores in 2026 and open around 80 new stores.
Latin America is a growth target, with seven new stores planned for Brazil, including Rio de Janeiro.
Paraguay will become a new H&M market in 2026 and H&M will also open its first store in Malta via franchise in the first half of 2026. H&M opened online in Ukraine during the first quarter of 2026.
The group’s more upscale label Arket opened its first store in Greece in the first quarter and will open its first store in Lithuania in 2026. During the first quarter, Arket and trend-led label & Other Stories were launched on Zalando in Sweden, the Netherlands, Denmark, France, Poland and Belgium. COS opened online in Canada in earlier this month.
In the first quarter, regional performance remained uneven. Sales in the Americas were down 3 percent in local currencies, highlighting the ongoing competitive pressure across the mid-market apparel segment in the region.
“The optimization of the store portfolio has had a somewhat negative impact on sales in the first quarter of 2026 due to store closures and rebuilds. For full-year 2026, however, the sales effect from store optimization is expected to be slightly positive. Online continued to perform well. Just over 30 percent of sales takes place online,” the company added.
At the same time, H&M reported lower stock-in-trade levels, signaling tighter inventory control and improved supply-chain management.
The first quarter numbers were “softer” than analysts expected.
“We think H&M has taken various steps to improve its offer for customers, which should lead to a stronger sales performance in time. However, a lot of things have to improve together and so far the recovery has been somewhat unbalanced in our view,” said RBS analyst Richard Chamberlain.
“We see potential for H&M to move to a double-digit operating margin goal over time, driven by gross margin gains and further cost efficiencies, but we see this as more of a medium to long-term development,” he added.
The combination of weaker sales alongside leaner inventory reflects Erver’s long-term strategy shift of of fewer stores, tightly controlled stock levels and store improvements to upscale the shopping experience and improve brand perception.
The exit from Monki, once positioned as a youth-oriented label, signals a broader willingness to streamline the group’s brand portfolio and concentrate resources on its core H&M banner and higher-margin concepts.
Industry analysts have increasingly viewed such moves as essential for legacy fast-fashion players navigating a more fragmented and competitive landscape. H&M faces mounting pressure from ultra-fast fashion rivals such as Shein and Temu, which have reshaped pricing dynamics and speed-to-market expectations, as well as high-street brands such as Zara, which has repositioned itself as a fashion proposition.
H&M’s first quarter results are in contrast to Zara parent company Inditex’s fourth quarter results, released March 11, which saw sales up 3.2 percent in constant currency.
Financially, the group showed signs of resilience despite the softer top line. Net sales for the first quarter were $5.3 billion, or 55.3 Swedish krona, while operating profit reached 2.1 billion, or $200 million. Margins were supported by cost control measures and a more disciplined approach to inventory, which helped limit discount sales.
