H&M has registered a surge in its third quarter (Q3) 2025 operating profit, benefitting from enhanced margins and reduced expenses.

The Swedish fast fashion retailer’s operating profit jumped 40% to reach Skr4.91bn ($518.9m) in the quarter, reflecting an operating margin of 8.6%.

Sales in local currencies grew by 2% during the quarter, despite a 4% reduction in the number of stores.

The company said in a statement: “The continued optimisation of the store portfolio has a negative impact on sales in the short term, with the closure of stores that are not sufficiently profitable, but new more profitable stores are successively being opened, which further strengthens the H&M group’s long-term position."

Gross profit stood at Skr30.14bn in Q3 2025, corresponding to a gross margin of 52.9%, up from 51.1% in the same period of the previous year.

Improvements in the supply chain and external factors affecting purchasing costs bolstered the gross margin, with exchange rate gains also contributing positively.

In contrast, the previous year’s third quarter was impacted by exchange rate losses on intragroup liabilities and receivables.

The result after tax rose to Skr3.21bn, equivalent to Skr2.01 per share, compared to Skr2.31bn or Skr1.44 per share in 2024.

Selling and administrative expenses fell by 5% to Skr25.17bn, with a 1% decrease in local currencies.

Cash flow from operating activities increased to Skr9.98bn, up from Skr8.21bn a year earlier.

“Compared with the previous year, cash flow was positively affected mainly by lower stock-in-trade and negatively mainly by higher tax payments and lower operating liabilities,” the company noted.

However, H&M cautioned that tariffs could have an increased impact on the upcoming quarter’s performance.