H&M shares slip as soft March sales offset profit beat

STOCKHOLM, March 26 (Reuters) – Fashion retailer H&M on Thursday ​forecast a small rise in March sales, a subdued outlook that hit ‌its shares despite a bigger than expected increase in first-quarter profit, helped by tight cost control.

The Swedish group said its flexible supply chain would allow it to adapt, if needed, to economic ​fallout from the Iran war.

“In a still challenging macroeconomic environment marked by increased ​geopolitical uncertainty, flexibility is more important than ever. With the customer ⁠in focus, short decision paths and good cost control, we can adapt to a ​rapidly changing environment,” CEO Daniel Erver said in a statement.

Operating profit for December-February ​rose for a third consecutive quarter to 1.51 billion crowns ($162 million) from 1.20 billion a year earlier, topping the 1.39 billion expected in an LSEG poll of analysts.

“Towards the end of the quarter ​our well-received spring collections contributed to a positive sales trend, which also continued ​into March,” Erver said.

Sales measured in local currencies were down 1%, implying a sequential improvement in February ‌from ⁠the first two months of the quarter. H&M had previously flagged a 2% drop in December-January. It predicted on Thursday a 1% increase in March.

Analysts said the March outlook fell short of expectations, and H&M’s shares were down 5% in early trade ​to September 2025 lows.

“Only ​1% … is somewhat ⁠disappointing given management’s comments that the spring collection has been well received,” Alphavalue analyst Jie Zhang said.

The rival to Inditex said ​it was closely monitoring developments in the Middle East and the ​implications for ⁠global trade.

“With good flexibility in the supply chain and a low proportion of air freight, there are opportunities to adapt the flow of goods to changed conditions,” it said. “Middle ⁠Eastern ​markets account for a small portion of the company’s ​total sales and the markets are operated through franchise partners.”