H&M’s Q2 2024 Results: Flat Sales, Rising Profitability, and a Push into Latin America

In the second quarter ending May 31, H&M reported revenue of 54.82 billion Swedish kronor (? 4.95 billion €), down from 56.71 billion kronor a year earlier. Reported sales fell 3.3 % year-over-year, driven largely by a strong krona, while sales in local currencies were essentially flat. Operating profit increased after excluding one-off restructuring costs, reflecting higher margins and tighter cost control. The retailer continued to close underperforming stores, operating 3 % fewer outlets than a year ago (4,038 versus 4,166). At the same time, H&M opened its first store in Rio de Janeiro and announced further entries into Brazil, Paraguay, Argentina, Malta and Azerbaijan.

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• Revenue: 54.82 bn kronor (-3.3 % YoY)

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• Inventory: 34.94 bn kronor, a 10 % YoY decline (-2 % on a reported basis)

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• Store count: 4,038 worldwide, down 128 stores YoY

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• Regional sales: Western Europe down 3 % in local currencies; Southern Europe up 5 %; Americas down 1 %

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• Portfolio-wide sales: –7 % in local currencies, largely due to Monki store closures

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• Online sales share: just over 30 % of total revenue

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CEO Daniel Ervér framed the results as a transitional phase, emphasizing a shift toward “decision-making much closer to the customer” and a focus on profitability and inventory discipline. He noted that nearshoring and tighter stock levels have improved supply-chain resilience but caused temporary product-availability gaps in May–June, especially in Western Europe. CFO Adam Karlsson highlighted the use of AI for trend detection, merchandising and design, describing designers as “curators and developers of the assortment.” He added that cautious supply planning “affected second-quarter sales.” RBC analyst Richard Chamberlain said H&M’s steps should lead to “a stronger sales performance in time” and a potential move to a double-digit operating-margin target. Third Bridge analyst Yanmei Tang observed that lower inventory, RFID technology and data-driven buying have made H&M “much better prepared for disruption.”

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Analysts cautioned that the inventory-tightening strategy has reduced product availability, contributing to weaker sales in key Western European markets. The CFO’s admission that “the supply of garments … was set up a little bit too prudently” underscores concerns that overly cautious planning may suppress growth. RBC’s note that margin gains and cost efficiencies are “medium- to long-term” suggests that profitability improvements may not translate into immediate sales recovery.

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While H&M presented flat local-currency sales, market expectations anticipated modest growth, creating a gap between analyst forecasts and actual performance. The company did not disclose detailed regional breakdowns for the Americas, nor quantitative outcomes of its AI initiatives, leaving those impacts unquantified.

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The shift from top-line growth to margin expansion signals a strategic pivot for H&M as it seeks a double-digit operating-margin goal. Nearshoring and inventory reductions aim to enhance flexibility and reduce markdown risk, positioning the retailer to respond more quickly to divergent consumer spending patterns across price-sensitive and premium segments. Expansion into Latin America diversifies geographic exposure and taps growth potential beyond the saturated European market.

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H&M plans additional store openings in Brazil, Paraguay, Argentina, Malta and Azerbaijan, while targeting 15–20 % of existing stores for refurbishment by year-end. The firm will continue investing in digital infrastructure, AI-driven allocation forecasting, and RFID technology to balance inventory levels with demand.

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• “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,” — Daniel Ervér, CEO, H&M

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• “Our design colleagues…are the curators and the developers of the assortment,” — Adam Karlsson, CFO, H&M

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• “This quarter has been a difficult quarter for Western Europe,” — Daniel Ervér, CEO, H&M

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• “We also are working on consolidating our logistic network, and that led to some disturbances and lower availability for our customers, especially in the months of May and June in Western Europe,” — Daniel Ervér, CEO, H&M

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• “The supply of garments that we set up a little bit too prudently over the end of last year and into this year affected second-quarter sales,” — Adam Karlsson, CFO, H&M

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• “We continue to build excitement around our brands, and we have done that by tapping into cultural moments, but also partnering with exciting creators,” — Daniel Ervér, CEO, H&M

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