H & M Hennes & Mauritz AB (publ)

Good morning, and a warm welcome, everyone. Today, we present the fourth quarter and the full year results for 2025 for the H&M Group.

My name is Joseph Ahlberg, and I'm Head of Investor Relations. Before I hand over to our CEO, Daniel Erver, let me briefly outline today's agenda.

As usual, Daniel will start with a high-level overview of the quarter and the full year. This will be followed by a more detailed financial review from our CFO, Adam Karlsson.

Daniel will then highlight strategic progress, priorities going forward, and Adam will share a financial outlook. We will close the conference with a Q&A session, where Daniel, Adam and I will be available to answer your questions.

So with that, please welcome Daniel.

Good morning, everyone, both those of you joining us here and those of you joining us online. Today, I'm concluding my second year as CEO of the H&M Group.

And with that, I feel confident that we are on the right track. I want to start by saying that the progress that we saw in the third quarter has continued into the fourth quarter across several key areas, even though the world around us continues to be uncertain.

Sales in the quarter increased by 2% in local currencies. We increased our operating profit by 38% in the quarter, corresponding to a margin of 10.7% for the quarter.

This increase was mainly due to a further strengthening of our customer offering as well as maintained good cost control and an improved inventory efficiency. Looking at the full year 2025, it shows a solid progress across all our key areas, and we continue to strengthen our foundation for future profitable growth.

The sales trend was positive over the year as a whole and profitability strengthened during the second half. For the full year, sales increased by 2% in local currencies and our operating margin increased to 8.1%.

Earnings per share increased by 5% during 2025. And according to the first preliminary figures, we see that we have reduced our CO2 emissions in Scope 3 by 30% compared to the base year 2019.

Overall, these results confirm that we are making a solid progress towards all our important long-term targets. I will now hand us back to you, Adam, and you will take us through more of the financial numbers, and then we come back to the strategic outlook for .

Thank you, Daniel, and a warm welcome, and good morning, everyone. As Daniel highlighted, we have a strong foundation to build on as we have made solid progress during the year.

So let me take you through some of the key financial developments for the fourth quarter and the full year. In the fourth quarter, sales increased in local currencies by 2%.

And for the full year, sales also increased by 2% in local currencies, confirming a stable underlying trend. We saw sales increasing across a vast majority of our regions in both Q4 and the full year.

Online continued to perform well. The sales development should also be seen in the light of 4% fewer stores compared to last year, and we have now also concluded our closures of Monki physical stores.

As we're showing a stable trend in the underlying sales performance, the appreciation of the Swedish crown has negatively affected the reported numbers versus last year and with a currency translation effect as big as 7% during Q4. And given the current FX situation, this effect is expected to be even more negative in the first quarter of 2026.

The positive gross margin trend that we saw in the third quarter continued into the fourth quarter with 130 basis points year-over-year improvement. After this strong second half year, we reached a gross margin of 53.4% for the full year.

The majority of this development was supported by our improvement work in our supply chain, where the sourcing excellence work and the initiatives drives gross margin improvements. External factors affecting gross margins were positive in the quarter.

In the fourth quarter, selling and administrative costs decreased by 3% in local currencies compared to the same quarter last year. As mentioned, cost control is and remains an important focus across the organization.

And just to highlight a few of the key drivers behind our improved cost base throughout 2025, I'd like to mention logistic efficiencies. We have continued ongoing renegotiations of lease agreements.

We have strengthened our indirect sourcing and also found more effective and efficient ways to use our marketing resources. Operating profit increased significantly in the quarter and operating margin for Q4 was 10.7% compared to 7.4% during last year, an improvement of 330 basis points.

For the full year, operating margin increased from -- increased to 8.1% compared to 7.4% last year. And with a strong profitability improvement in the second half of 2025, the long-term rolling 12-month trend continues in a positive direction towards our long-term profit targets.

This development comes as we sharpen focus on our core business, as Daniel was outlining, strengthening product, our experience, our brand and with a firm focus on cost control. Inventory productivity improved during the year, and we ended the quarter with a stock in trade in relation to sales of 15.5% compared to 17.2% last year.

This improvement reflects the strengthened demand planning capabilities, more efficient buying and overall good stock management. The composition of the inventory is good.

Looking at the long-term trends for gross margin and stock in trade relative to sales, we continue to strengthen both of these measures during 2025 and particularly in the second half. Looking at the graph, you see the dark gray line representing the quarterly gross margin and the light gray line representing the stock in trade versus sales development.

And as you can see, the gross margin trajectory continues towards what we have previously discussed as normalized levels. Leverage has been maintained inside the H&M Group's net debt-to-EBITDA ratio, and that is 1 to 2x.

In the fourth quarter, we proactively secured a long-term financing with an 8-year EUR 500 million bond at attractive terms under our EMTN program. And with that, we have continued high degree of financial flexibility and liquidity buffer, and that makes us able to navigate the volatility and set us up to be well positioned for capturing future opportunities.

Cash conversion remains strong, and it's helped by active working capital management where we have seen good progress. And in order to distribute surplus liquidity and thereby adjust the company's capital structure, a share buyback program was initiated in November, and it was concluded by the 23rd of January.

The Board of Directors are proposing a dividend increase to SEK 7.1 per share for 2025. And if approved by the AGM, it will be split into 2 installments in May and November as in previous years.

So before handing back to you, Daniel, to summarize, we strengthened our gross margin in the second half. We improved inventory productivity, and we delivered strong cost control.

Together, these factors supported a significant improvement in the profitability for the quarter and enabled a positive margin development for the full year. So with that, I'll hand back to you, Daniel.

Thank you.

So throughout 2025, we have continued to focus on what matters most to our customers, and that is really offering great products, inspiring customer experiences and building strong brands. On the product side, we have made improvements in several foundational areas during the year.

We have made our product creation process more effective by a number of things. We have strengthened creativity and craftsmanship.

We have improved our demand planning. We are working on becoming faster in our decision-making by strengthening how we spot and analyze trends and through a closer collaboration with our suppliers, as you already have mentioned, Adam.

Combined, these different initiatives helps us to respond better and faster to customer needs and strengthens our availability to deliver more on-trend current fashion. At the same time, we have also continued to develop our customer experience across all of our channels.

During the year, we have completed a comprehensive upgrade and rollout of our online store across the globe, where we offer more inspirational content, better product pages and improved search functionality. And that has been very well received by customers, and that has led to a strong sales performance in the online channel during the year.

We have also, while improving our digital experience, accelerated upgrades across our physical store portfolio, including improvements in both technology layout as well as product presentation. We will continue to optimize our store portfolio.

And for 2026, we see and estimate that the sales effect from the optimization will turn around to become slightly positive in support of our sales. In addition, we will continue with our digital expansion as well.

In August, we reached a really important milestone for the H&M Group when we launched the H&M brand in Brazil. The pride of our teams and the excitement in the eyes of our customers clearly showed us that our elevated customer offering, inspiring experiences and a strong brand truly resonated with the local Brazilian consumer.

During the fourth quarter, we continued to strengthen the physical presence with several other exciting openings in key locations across the globe. We opened new stores in Athens, in Los Angeles as well as in Shanghai, where we reopened our store on Huaihai Road, giving new life to a really iconic location for H&M.

Another example is our new store in Le Marais in Paris, where we are offering our customers a more curated and both assortment and experience. And in October, we opened a fantastic new concept store in Seoul in the historical district of Seongsu.

Creativity and brand strength remains central to our strategy as we move forward. And during the year, both the H&M brand as well as COS presented their autumn/winter collections at the fashion weeks in London and New York.

And I particularly want to highlight and point out that this was important for 2 different reasons. Both it shows our fashion credibility that we can show up at the world's most important fashion weeks as well as it enables us to reach audiences and engage them in relevant social channels in a way that we haven't done before.

And here, you see a few examples from our London fashion show with the H&M brand during September. During the year, we also entered several important external creative collaborations, continuing our ambition to democratize great design and make it accessible to the many.

In November, the H&M brand launched a well-received designer collaboration together with Glenn Martens, who is the highly regarded Creative Director of Maison Margiela and Diesel. H&M also announced that we will launch a new collaboration with Stella McCartney during the spring of 2026.

I'm very proud together with the team to make real progress in reducing our climate impact. Since 2019, we have reduced our CO2 emissions in Scope 3 by around 30% compared to the 2019 baseline.

That puts us well on track to meet our science-based targets to reduce emissions by 56% 2030. And these results did not come from one single initiative.

They come from a hard work of integrating sustainability into how we run and operate our business on a daily basis. So to achieve this, what we have done is we have increased the use of lower impact materials such as certified recycled or organic fibers.

And we are decarbonizing our supply chain by working differently with our suppliers. This means that we have fewer but stronger partnerships.

We have suppliers that we want to grow with long term, which is possible for us to offer them more stable volumes and better visibility of what to expect from us. And in return, that leads to them investing in renewable energy, more energy-efficient processes and a phaseout of coal.

This close collaboration is truly what makes the difference. When business and sustainability come together, we can truly reduce emissions at scale and show that fashion can be both affordable and sustainable at the same time.

And the impact of the work that we've been doing is not only obvious in the results, the work we do both for climate but as well as for all the other sustainability areas. The work is also being recognized externally, where we are seen as one of the leaders in the industry, as you can see here on the slide.

Firstly, the report, what fuels Fashion 2025 by Fashion Revolution. In this ranking, H&M, we were ranked as the #1 out of 200 major fashion companies for our public disclosure on climate as well as energy.

Secondly, you can see the Stand.earth, who ranks us as #1 out of 42 different fashion companies in their 2025 fossil-free fashion scorecard, and that's for the second year in a row. Thirdly, you can see the NGO Remake 2024 Fashion Accountability report that rates 52 different fashion companies in 6 different categories.

And here, we came out on the second place overall. And finally, we were just A listed by CDP for our work on climate as well as water.

CDP is one of the world's leading environmental disclosure system that assesses thousands of companies each year. So before we wrap up, I want to take the opportunity to have a look with you on some of the key highlights that we just talked about that has happened during 2025.

So please enjoy a very short film on what has happened. [Presentation]

2025 was a year that was characterized by both geopolitical and economical uncertainty affecting both consumers and as well markets in general. And we see similar conditions continuing into 2026, which underlines the importance of us having an effective organization with short decision-making paths being close proximity to our customers and having high flexibility as well as you spoke about Adam's strong cost control.

Looking ahead, we will continue to strengthen the foundation for continuous profitable and sustainable growth looking into 2026. Our focus will remain on what's most important to our customers, and that is to always offer the best value for money.

We will continue to expand into growth markets such as Brazil and other parts of Latin America, for example. We are also happy to share that we will reopen the H&M location here in Stockholm on the iconic location of Hamngatan later on this spring.

And alongside investments in new markets and upgraded customer experiences across many of our existing stores, we will also continue to invest in our tech infrastructure. By enabling a more data-driven decision-making and increased use of AI, we will be able to make better informed decisions, which will strengthen our flexibility and further enhance our creative capabilities.

Altogether, that will help us to deliver a more inspiring, relevant and competitive customer offer. So now back to you, Adam, for an outlook -- financial outlook at 2026.

Yes. Just try to frame the year then in terms of how it will potentially affect our numbers then.

Starting with the gross margin. Our sourcing excellence initiatives continues both in Tier 1 and through the Tier 2 supplier base.

We see that the improved inventory productivity enables lower need for end-of-season clearances. But as you were also pointing out, Daniel here, we see a weak consumer sentiment, particularly in many of the European markets, and that could drive an increased need for temporary activations and deals.

For the first quarter of 2026, we assess that the overall effect of external factors to be somewhat positive compared to the corresponding period last year. However, the cost impact of tariffs that we've already spoke about and that we've already paid are now starting to fully funnel through into our cost base.

We see that we have a somewhat increased cost pressure for 2026, for instance, coming from a low level of one-offs in the cost base for 2025 and connected to the implementation of new tech infrastructure in 2026. Our focus remains on enabling a continued strong cost control and through further efficiency measures that, for example, are including continued rationalization of our store portfolio, implementation of a more efficient organization and of course, continuously allocating resources to the highest area of impact.

With this, our ambition is to grow sales and admin costs at the low single-digit levels, and that will continue into 2026. Daniel, you pointed out currency volatility.

It has continued also into 2026. A stronger euro versus U.S.

dollar contributes positively to the gross margin. And this factor positively contribute as one of the external factors in the gross margin development for the fourth quarter and also affects our outlook for the first quarter in 2026.

However, then the opposite, a stronger Swedish crown leads to negative currency translation effects. This affected our result in the fourth quarter and is expected to have an even greater effect on the first quarter based on the current FX development.

We continue to implement demand planning improvements. We continue to strengthen our in-season buying.

We continue to improve availability in our warehousing network. And we have an investment frame of SEK 9 billion to SEK 10 billion throughout 2026.

And just to point that where the main investment will lie, it will continue to be in the store portfolio and investments in the tech infrastructure that will now lift to be the second biggest area. After a high period of investments in the supply chain, we are now deploying new warehouses during the year, leading to increased availability and flexibility through across our channels.

So that was a broad outlook into 2026. And with that, over to you, Daniel.

So all in all, we know that we have more work to do and that we are not done at all. But the progress that we have made so far, combined with a clear plan for where we're moving ahead, gives us confidence that we are moving in the right direction and that we are making progress across all of our long-term targets.

I'm proud of what we have achieved, improving our results, our financial results while also staying true to our long-term climate ambitions. And at the center of that progress are our people.

It's our great teams that I and colleagues that I meet in stores, warehouses, offices around the globe that truly makes this possible every day. Driven by creativity, engagement and shared values, all of us, we worked really hard to offer fashion, quality and sustainability at a price that is accessible to the many.

Thank you for listening. And then we will now go to the Q&A.

So Joseph, will you take us through?

I will indeed. Thank you, Daniel.

We will now start our Q&A. We will begin with questions from participants in this room and then open up for questions from the telephone participants.

[Operator Instructions] With that, we start with the gentleman to the right here.

Niklas Ekman here from DNB Carnegie. I guess the biggest surprise in the results here was the low OpEx.

Can you elaborate a little bit here on the reasons for the decline? And you just said here at the end of the presentation that you expect a single-digit increase of SG&A during '26.

So I guess this is not a lasting impact. Is this due to a reduction of one-off items or anything?

Just if you can elaborate a little bit on that.

On top of the more sort of structural improvements that we've done throughout sort of logistic efficiency, how we operate our stores and how we improve sort of marketing productivity. We have also improved because of the work that we've done in the supply chain, the levels of write-downs and also somewhat affecting the result in the fourth quarter, the depreciation level.

So it's -- some of those effects are more sort of isolated connected to Q4 effects, and that is where sort of they end up in the book and I think reinforces the overall trend we have in the more general OpEx development. So I think that is the area to highlight connected to the development in the fourth quarter.

Fredrik Ivarsson, ABG. Question on the start of Q1, minus 2% December, January.

Can you say anything about the sort of momentum through those 2 months, whether maybe January was a little bit stronger than December?

So when we guide for current trading, it's always important to take that number with caution because on that short-term perspective, there are so many different short-term effects affecting the trading. So there are a number of effects that are, I think, good to be aware of when we look at -- when we looked at the first quarter development.

On one is we see a shift in the market around Black Friday. We see Black Friday becoming Black Week.

We see 11/11 Singles Day becoming a phenomenon. That also helped us to drive a strong end of the fourth quarter with a strong performance in the fourth -- in November, and that had a muted effect on the start of December, which we could see across the markets, but also for us.

So that's one effect. Then there is a calendar effect in Q1, the fact that the Chinese New Year is in February this year that was in January last year.

So that has a significant effect on the number. Then we have seen muted market demand in some of the large European markets that are important for us.

We see that in public numbers and figures for Central Europe. We also see it in some of our competitors reporting.

And we believe that we are performing better than the market, but the market sentiment has gone down in Central Europe. And then the last thing to be aware of is we -- looking at the U.S., we speak about the report that we went into the fall with a very prudent planning, given everything that was happening around tariffs and with a big respect for the U.S.

consumer. We've seen that the demand has stayed very strong, and it's positively surprised us, and we haven't been able to fully supply to that demand.

And that we worked hard on using the flexibility that we have in our supply chain to really catch up on the supply, but that also have a spillover effect into the first quarter, which is a quarter that is a lot about reductions of the fall season. So those are the different components that we think are important to take into account when we look at Q1 trading.

And also quick, if you could reflect on the marketing investments you've done during the last few years and then maybe especially if you have seen any great impacts on younger generations?

So the marketing investments, we believe, are truly important. As a brand, we have all of our brands, but especially the H&M brand has an important job to always attract and onboard new generations that are coming and marketing plays a crucial role in how we keep the brand interesting, that there's a heat around the brand.

So we're happy that we do invest in marketing to be resilient for the long term. We did start and as you know, when we -- in 2024 with increasing the level of investments.

And as we have moved ahead, we have learned. So in the beginning, it was a lot about the brand position at large.

When we came into 2025, we shifted more into using our product and the product offering as the core engine of marketing. And that's why we decided for the first time since 2004 to put the H&M's main collection on the catwalk at London Fashion Week because we see that we get a stronger efficiency and effect out of the marketing when we tie it closer to our product offering.

And that's -- that has helped us, as Adam mentioned, to continue to stay very active and see marketing as a tremendously important tool, but improve the efficiency, and that work will continue into 2026.

Daniel from Danske. Previously, you have singled out the performance in different sort of gender segments.

Would you shed some light on that, womenswear, kids, men's in Q4 into Q1?

So as we talk about also today, product and the product offering truly is the most important for our customers. And we worked really hard, as we mentioned, on a lot of different areas to improve how we leverage our creativity in craftsmanship, how we improve the supply chain, how we improve trend precision.

And that work started within womenswear, and that's where we started to see effects during 2025. And it has performed really well during 2025.

As we come out of the year, we start to spread those learnings and that development to all the customer groups. So we expect to see effect from the learnings we made on womenswear also spreading to the other customer groups throughout 2026.

Is it sort of kids before men's? And I think you've said before that kids are maybe 1 year behind in terms of spreading the learnings.

I think we have assessed that doing work at that scale as we have done in womenswear, it probably takes a year. And sort of as we started the work in womenswear, it takes some time to catch on.

But we don't -- we see no need for holding menswear back as we accelerate kids, they can accelerate in parallel.

But are you seeing that sort of the learnings being translated into kids and men's? And is that now having an impact?

Or is that still too early to see a real impact?

We're starting to see really positive receipts and indications, especially looking at the new spring season that has come in that we start to get traction on menswear and kids wear -- that makes us confident that they will benefit from the same development as ladies did.

Yes. And then just maybe a question for Adam.

You mentioned the tech investments. Is that going to be evenly spread through the year?

Or is that sort of front-end, back-end loaded in any way?

We will see an elevated level of investments coming into the end of '26. And then we believe some of these things that we're doing, changing sort of the fundamental ERP systems for a group and so forth will take multiple years.

So I think we will see the first beginning of it in this year and then will be fairly evenly spread over the coming years. So it's more of a late '26 effect for this year, but then ongoing on an elevated level to capture this potential that Daniel was speaking about, AI improvements and such.

We have invested significantly in our logistic network, and we start to see that, that comes to life and start to generate benefits in '26 and then that investment level goes down as we ramp up the tech investment. And that's not only for necessity, it's really to build the foundation for future success for H&M that we need to do these tech investments.

So with no further questions from the room currently, let's hand over and receive some questions from telephone participants.

First question, you're talking about your supply chain improvements. Can you just try and either quantify or at least qualitatively describe what the -- what you're doing in terms of the supply chain improvements, what it means for the customers, the speed of lead times?

Just a way of thinking how much have you done on it compared to where we were? And how much have you still got to go looking forward?

So we're doing a number of different things when it comes to supply chain. One important thing we spoke about that helps us both with the speed, with the quality as well as sustainability is to consolidate our supplier base, where we work with fewer, but really the best suppliers out there, and we build long-term strategic partnership with them, which helps us both to improve the product making, but also price quality as well as sustainability.

So consolidating the supplier base and improving the way we negotiate and build strategic partnerships is one important piece. That also allows us to leverage some of their capabilities and strength when it comes to trend detection, design, supply and leveraging some of their best capabilities to a bigger extent helps us to further improve our entire sort of flexibility and speed of reaction.

Then we are working with improving the way we forecast demand and then how we build a strong logistics network to match supply to that demand and that is leveraging data and now further on looking to leverage also AI into that process to become much more precise in how we forecast demand down to every single stock node, and that helps us to better match supply to that demand. So -- and then we work intensely with our design teams here, which is also part of the supply chain on improving their trend forecasting capabilities, leveraging their craftsmanship, giving them AI tools that really can enhance their creativity at scale.

So those things combined helps us to reduce lead times. And as we talked about before, we don't need to reduce lead times everywhere, but in certain product lines within certain categories, that speed and flexibility is tremendously important, and that we can really make sure that we within 5 to 6 weeks can take a product from idea to the shelf and present it to the customer.

So on the cost side, we have come far. It's been a big part of how we have been driving the -- gross margin improvement has been through the sourcing excellence initiatives that Adam described.

But as we also mentioned, we see continued potential into 2026 and beyond on how we work with both Tier 1 and 2 suppliers on that side. When it comes to leveraging the capabilities and developing our own capabilities for being more reactive and more relevant, I think we have taken one important steps, but there are several more important steps to be taken to further improve the current fashion level of the collections that we present to our customers.

I don't know, Adam, if you want to complement this.

But also mentioning the investments that we have done in the sort of just pure logistic network also enables us to stock pool effectively and not to be sort of channel-specific in how we steer the stock. So it's, as you said, a full end-to-end approach that we're taking, everything from leveraging data in our creative processes to enabling just physically simplifying that we ensure that the stock is supporting the customer in the right place at the right time, so...

And the tech investments that we speak about will also heavily focus around not only, but to a large extent, also around supply chain improvements and new capabilities.

Are those in supply chain changes, do they go across all of the cost of goods sold, all of the products that you're doing? Or is it only at the moment, a limited proportion of your products and there's still some to come?

It goes across all. But I think, as I said, there is some potential that we have captured and more potential to be captured still, but it goes across all the categories.

Then there is different benefits in different product categories. If you look at Essentials and Basics that have a very high predictability.

It's more about having a good safety stock, high availability, low cost of transportation. That's where we can optimize.

And then if you look at the latest fashion is, of course, to make decisions later with better data, which reduces the fashion risk and increase the precision.

Great. And the second question I've got was really the market we're hearing from some others is that they're having in Europe, particularly to invest more of the gross margin gains into pricing, maybe the market has become more competitive.

Chinese retailers or others. How are you thinking about -- you've obviously got your gross margin external factor gains coming into 2026.

You've got to make some investments into OpEx. How are you balancing the equation with thinking about investing gross margin to get that top line moving in the current customer environment?

Is it something that you can do with regard to pricing and promotions to stimulate demand? Do you think that's likely to happen?

Yes, that was what Adam mentioned. So we have a couple of factors working in our favor.

It's the external effect on the gross margin, but it's also a lot of the improvements we do ourselves in the sourcing excellence work. But then it's also the fact that the collections have been very well received by the consumer, which allows us to sell a wider range of products and also helps us to reach a much better stock composition.

And coming out of the fourth quarter, we also see that we have a very healthy stock level. So as Adam said, we don't need to use as much of promotion investments to solve overstock because the stock is very healthy and the collections are being well appreciated.

But we do see a given the muted demand and that there is a large part of the customer base who is really looking for making not only great value for money, but also finding -- making a great deal and finding products at discounts. So that's why we are using reductions as a lever to drive top line and stimulate that demand.

If you look just at how collection has been received and how our stock levels, we could be more aggressive in reducing the reductions, but we do see a need that we need to stimulate the demand.

And on the investment side, that's where we also reiterate -- our speaking about normalized gross margin. So we don't aim to have a gross margin elevation, I mean, to the stars given the somewhat temporary external factors, but we'd rather take that and as what you said and then reinvest in the product, so to say.

But there's still some improvement potential in how we work, but then also that allows us together with external factors to reinvest in the product to strengthen the customer offer.

The first one was just on the CapEx. So I think it's -- you guided to SEK 9 billion to SEK 10 billion, which is lower than this year.

And I know you've commented on sort of completing the supply chain investments, but you're ramping up tech. But I guess it's still a bit surprising in the context of a net positive contribution from stores.

So just wondering if you can walk us through your plans for CapEx.

Well, if we then divide it from the top then, so we will see a lower level of closures this year and a higher share of new openings. And then we were pointing out some of the markets we continue to invest in.

Then we are also finding ways to leverage learnings from sort of rebuilds over the last couple of years to really deploy that into many stores and make many customers get the upgraded shopping experience. And that allows us to be sort of CapEx effective during 2026, but then, of course, leveraging the learnings in an effective way.

Secondly, we have the logistics side that has been on elevated levels, both '24 and '25, and that is more of a cyclical level. Now we're sort of seeing that we have a very strong setup that will be started to take into operations during end of the year that allows us for the benefits that we're outlining then with flexibility and availability.

And thirdly then, tech is also somewhat cyclical. During 2018, 2019, we did big sort of fundamental investments in our online platforms.

Now it's time again to do those and also leveraging a lot of the new technology that comes to ensure that we are future-proof here. So we're shifting focus to ensuring that the core of our technology is future-proof, and that is also somewhat cyclical.

But it's, at this time, countercyclical towards the logistic investments. So the net effect will be negative as the elevated levels are coming down on the logistics side.

And as I mentioned, the increase on the tech side is starting this year, but it's likely to increase on a somewhat elevated level also into '27 and '28. I don't know if you want to add anything on.

I think you can connect to the store portfolio. I think we spoke with that before that we are opening as well as closing stores.

The stores that we are opening are stronger than the stores that we are closing. So -- and now we come down given that we are moving out of a period of high level of consolidations, both with Monki as we closed the last Monki physical store this year and also coming into a lower level of closures in Asia, the net effect becomes positive.

And then we have worked with the team intensely on how do we build an exciting, inspiring physical store experience. And part of that is completely rebuilding a store, which is high CapEx intensive, but part of it is also identifying what are the key levers that really makes the difference for the customer and their perception and picking out some of those pieces and putting that into a program that can reach a further -- a much larger part of the portfolio is the work that we initiated in the end of 2025 that would spread into 2026.

So that means that we'll touch a lot of stores, but at a lower CapEx level than if we would go through with a full level rebuild where we sort of clear out ceiling, flooring, HVAC and everything. Now we're going to touch the key value drivers instead.

And that allows us then to touch more customers and their experience.

And just one more sort of more long-term question. You also own Sellpy.

Could you just comment on how you see the increasing sales in the customer-to-customer platforms and the resale market and if you're seeing any impact on that in the first-time market?

No, we see an increasing consumer interest and the behavior shifting to be a more natural complement to the first-time market is how you shop secondhand. And we are really proud and grateful to have Sellpy as a part of our group, and they have delivered a very strong year when it comes to growth, tapping into to that shift in customer sentiment.

We see it in Northern Europe, but we also see a very strong year in Central Europe for Sellpy, which is great to see. And we see, of course, on the site -- so Sellpy is not the peer-to-peer.

That's sort of a well-managed service, which makes life very easy for the customer where you sort of have your garments picked up, you have them sold for you and you're part of splitting with the profit, which makes it very easy to reuse your wardrobe and be more sustainable. And it also is a clear customer benefit of having a monetary sort of gain from doing it.

The peer-to-peer, we see are accelerating. We are -- have a few venture investments in our venture into peer-to-peer platform because we see that is also a great service for the customer and that we will see continuing.

But we are monitoring through Sellpy and through our venture investments, how the market is developing. And we are continuously looking at how can we combine these 2, where does it make sense to combine it for the customer behavior and where is it more that it runs in separate channels.

But it is an interesting development and a development that we see as very positive that our garments are made to be used many, many times and they can be used through generations and having more ways for the consumer to do that is something very, very positive for our long-term transformation.

I've got 2 questions as well, please. First one is around FX.

Obviously, there's been some quite extreme FX moves going on with a stronger SEK and a stronger euro against the dollar and so on. And I wondered if you can talk about how you approach pricing in that environment, especially in markets where the currency has been particularly weak against the Swedish crown and whether you're trying to sort of smooth some of that pricing impact out for this year?

Should I start and then please fill in. So for us, the most important thing is to always offer the best value for money and be truly competitive so that all customers coming to us can feel really confident that they always make the best deal and get the best value for the money they spend when they come to us as the combination of relevant fashion, quality, price and sustainability.

So that means that we are monitoring our positioning in the market, assessing the strength in our customer offer, how strong are we? And based on that, we are adjusting our price positioning.

We are not adjusting price in markets that are euro markets or dollar markets because of the SEK strengthening. We are looking at each individual market because that's the market where our customer lives.

And then, of course, those markets are shifted depending on how their currency is affecting inflation and the local market position. But we are not -- by being a Swedish company and translating into SEK, our top line, we are not making currency adjustment because of that.

We do it from the end of looking at the competitiveness and the strength of the customer offer that we want to see in each market.

So our hedging strategy then supports that way of thinking.

Got it. Okay.

Brilliant. And my second one is on the U.S.

performance that looks to have been a bit sluggish in Q4. I think you mentioned that you felt you're a bit tight on stock availability there.

Are you now building back stock availability in the U.S.? Do you think it will -- it sounds like there's still going to be some effects in Q1, but are you expecting that to be sort of more normalized by the end of this first half?

Or should we still expect a pretty cautious sales outlook for the U.S. market?

So when we looked at the U.S. this spring with all the changes that were happening around tariffs and the situation, we decided to apply a prudent way to approach the U.S.

And then we were positively surprised by the continuous demand for our offering and the resilience of the U.S. consumer.

And then we have used the flexibility that we built up in the supply chain to gradually catch up on the supply to match it better to the demand, but there is a delayed effect. And we see now looking at the spring season that we have a better composition and a better supply in the U.S.

But with that said, U.S. continues to be a very volatile market.

We have seen a very high level of inflation and price increases in the U.S. markets across competitors.

So -- we are accelerating supply, but we are still monitoring to make sure we don't pivot to the other side of overallocating to the U.S. But we see that the composition of the spring season is better fit to the demand expectations that we have for the U.S.

I have 2 questions related to the gross margin, please. The first one was just in terms of the tailwinds from external factors that are coming through.

You've obviously been very clear that there's tailwinds in Q1, but less so than in Q4 if we include tariff effects. As we go through the rest of the year, would you expect the magnitude of that tailwind to widen?

Or actually is Q1 like sort of a peak point for that tailwind, please? And then my second one was just in terms of the translation drag on the gross margin that you call out.

Is it possible to quantify what that was in Q4, please? That's something I at least find very difficult to estimate.

Yes. So looking at the external factors, as we have called out, we have seen that some of those were positive in the third quarter, also in the fourth quarter, but somewhat less positive than in the third quarter connected to increased cost for tariffs that we have been paying throughout the year.

And that sort of trajectory continues also expectedly into Q1, where we maintain an overall positive impact from external factors, but on the margin, more cost impact from tariffs. Overall, looking at 2026, it is positive outlook from the start of the year and with the visibility we have from these external factors.

So currency, freight, materials and so forth, looking net positive, also including tariffs. Then to your second question connected to the currency translation drag.

Here, we have seen a -- connected to the strengthening of the Swedish krona and increased impact sequentially in the fourth quarter compared to the third quarter. As we have disclosed, our sales impact from currency translation was negative of 7% in the fourth quarter compared to 6% in the third quarter.

And given how currencies have developed so far in this quarter, we also see that this could be also a more negative impact in the first quarter compared to the fourth quarter. So that is what we're seeing.

And since we are calling out this effect, it does have a significant effect on the reported outcomes.

Just one follow-up, if I may. May I check, does that external tailwind, does that get larger as the year -- as this year progresses?

It's very difficult, of course, to predict where it's going. But we had a very sharp drop and a sharp difference, at least in the effects that we ended your answer with the SEK to the U.S.

dollar. So that was very sharp during the first quarter of last year with then yes, difficult to predict, but we will have a big effect in Q1 and then potentially a less negative relative effect throughout the rest of the year.

But that's only sort of speculating, of course, in how the currencies will move. But we are assessing the situation that we're meeting a sharp drop in the first quarter.

So that is what we have visibility on right now.

Maybe just a couple from me then, please, both on margins, just to build on what Georgina was asking. Maybe again, trying to stand back from the detail a little bit.

Adam, I think you referred to normalized gross margin and not wanting, obviously, the margins to go through the stock. I think in the past, you've referred to 54% to 55% being the sort of what you see as normalized gross margin and that being consistent with a 10% operating margin.

So maybe just if you can take a look at it that way, it feels like this is a year where you could be at least at the lower end of that 54% to 55%. Then the question is, how do you sustain it is an important one because clearly, there's a lot of volatility, a lot of moving parts here.

So even if you were to get the 54%, 55%, and that sort of range? How do you sustain it?

What are your thoughts there? That's the first one.

Secondly, going back to a margin target that we have talked about in the past, the 10% operating margin target. What conditions do you now need if you're already within the sort of thresholds of the normalized gross margin to then achieve the sort of 10% operating margin?

And do you get -- is your confidence and conviction in reaching that growing based on what you've seen over the past year?

You're starting with the gross margin, you are right that there are opportunities now to continue given the external factors to move in closer to that normalized interval as we were speaking about. But also reinforcing what Daniel said here is that the product is the most important thing we do.

So it's not about short-term sort of increase in gross margin. It's to build a stronger long-term offer.

And I think that is then the strongest hedge towards gross margin pressure over time that we take the opportunity now to invest in the product to further then improve our stock availability, reducing the need for sort of clearance markdown and over time, then also through the product, strengthen our brand, the pricing power that will sort of help us to sustain gross margin levels over time. So it's -- for us, it's a long-term journey where we have an opportunity now to both, I think, take steps towards the more normalized gross margin level whilst then continuously strengthening the offer and the product and the value to the consumer.

So I think that is sort of the long-term strongest hedge we can do connected to volatility. The second question was the 10% margin target.

And I sort of mechanically see that if we then move into this range, let's estimate that we have another 100 bps if you're in the middle of that range on the gross margin, that takes us then to plus 9% and then -- or like north of 9% EBIT margin. And then connected to what we also call out that we've been showing that we have the ability despite an inflationary pressure in our cost base to have a sort of positive delta in local currencies in how much sales grows and how much our cost base grows.

So that is our clear intention to continue that journey. And that over time, of course, with normalized gross margin levels will sequentially then take us closer to the long-term margin targets.

While continuing to have strong collections, inspiring experiences -- excitement around -- with the positive sales momentum to make sure that...

Absolutely.

Very small follow-up on the sales point. Clearly, externally, as we see, there's quite a lot of volatility in the quarterly sales data that you report.

I guess if there is something that you can share perhaps in terms of the loyalty data, customer data in terms of transactions or average selling prices items per transaction. Anything you can talk to that is giving you really are firmly on the right track on sort of rebuilding the sales in H&M brand?

If you look back to the year, I think we have been posting growth around 1% to 2% and in that interval consistently through the quarters, which is, as Adam explained in the report and higher level of consistency what we've seen in the past, and we attribute that 100% to more appreciation for our customer offer from customers across the board. And what we see positive is that the customers that we have within our customer base really want to trust us in a wider range of categories.

And that means they're referring from trusting us not only maybe on basics where we've been very appreciated or in kids clothes, but also trusting us in their sportswear, H&M Move has performed very well, but also trusting us in other product categories like in dresses, in dresses for occasions and that they widen their spend with us, which we see as a receipt that they are appreciating what we're doing. So when looking at the customer base, we see that the loyal customer truly want to widen their spend with us.

And we see when we perform well and when we deliver strong collections that are really relevant, they are also very keen on sort of deploying a larger share of their wallet with us. That gives us confidence that we are on the right way, but we really are from our own ambitions, just getting started.

We do believe there is much more potential to tap into as we move along in implementing the plan, strengthening our foundation to then further accelerate growth as we look ahead.

And I think these clear receipts we see across regions and also over time, each quarter, we have seen the same pattern repeating. So we -- with that, we feel this is a clear trend.

Trend is the right way, but we believe that we have higher ambitions.

The level can be improved.

The first question was on Agentic Commerce. Just wondering how you're positioning H&M in that world.

The second question was on logistics. You're talking about new European warehouses that you're launching.

Just wondering how you're managing that capacity amid relatively muted volumes and what you're looking for from that new logistics capacity. And the final one is on the work you're doing in the assortment relative to how that's being -- how the brand is perceived by customers.

So obviously, you've done a lot of work over the last 2 years, investing quality, value, stretching out the high end of the price architecture. But have you seen a meaningful shift in how customers actually perceive the H&M brand?

And where is the brand now relative to where you would like it to be? And what are the biggest areas of improvement or future improvements?

Okay. I'll try to, and then please remind me if I miss any of the questions.

So if we start -- what was the first one? Agentic.

Agentic -- yes. It's a very, very interesting area that I believe will drive a big impact on how we meet the customer over time.

And then as always, with really new disruptive technologies, the speed of adaptation is difficult to assess. But we know that a large amount of our customers, they want to be better guided in how they make their choices.

Fashion is fantastic. It's fun.

It's energizing, but not for everyone. It also -- it can be painful and difficult to find what you want to wear and how you want to dress.

And anyone who has tried to get a little bit of help of any agentic AI know that it's early, but you can start to see the signs of that you actually get help on how to dress, how to express your personality, how to look good. So I think it will drive a lot of change.

We are looking at it from different angles. We're looking at for how can we apply agentic AI into our own experience.

We have seen the first tests that we have done in improving search, for example, applying conversational search as opposed to just normal keyword search, reduces the amount of 0 search results and sort of increase the relevance for the customer. We see a young consumer being more used to the conversational search pattern.

That also helps us to apply many more attributes to the product so that the results can be more relevant and more guiding. So we are working on looking at how can we implement Agentic AI into our own digital experience to better serve and guide the customer.

At the same time, we are curiously looking at what does it mean for the customer -- for the consumer journey in what way will they show up to us in the future. How do we make sure that we are present in the journey regardless of where they start the journey.

So that is, of course collaborating with Google, OpenAI, with other platforms that are driving that change to see sort of how do we tap into that ecosystem. And that is a very, very, very early stage where there is a lot to be learned and a lot to be seen, but something that we are curious about.

And I believe an area where outstanding value for money will become more important than ever that truly our product lives up to standing out from competition when it comes to value. The better the customer becomes of making that assessment, the more important is that we really stand out on the value that we offer in the specific product.

So area of big disruption, very, very early stages, and we are exploring it both in our own sort of world, but also in the ecosystem outside of our own channels. Yes.

Secondly, logistics. So the key here is to increase availability.

We see an opportunity to create better stock pooling, both in general, but also especially between the channels so that we truly can use our omni presence to drive better availability for our customers so that we can use online stock to serve a store customer, that we can use stores as a stock node to serve online customers, and that's a lot of the work we do when we look at the European network, how can we leverage the total stock of Europe to better serve our European customer in improving the availability while we reduce the total stock levels and increase the precision of the stock that we carry. So a lot of the work goes into making sure that we have capacity, but especially that we increase availability.

And then, of course, that we make -- this is one area where we need to manage the inflationary pressure on costs, and that's also an important work of the logistic investments that we do in Europe. And then thirdly was...

The brand perception...

The brand perception. So we see also that we have taken steps that we get signs that we're moving in the right direction.

We get those receipts from customers in the way they act, but also what they say when we ask them in quantitative surveys. But we are not where we want to be yet.

We are on a long journey. We are putting the foundations in place.

I'm confident that the direction that we have set are taking us towards the right direction, but a lot of the effect of the work that we have started is yet to be seen and a lot of the work that we have not yet started is also yet to be done. So we are starting to take steps, but impact is not yet where we want it to be.

We are in 81 markets, and we are changing the perception of a wide demography of customers, and there's a lot of work left for us to be done in that area.

And just a follow up very quickly on the logistics point to say, are you -- how are you managing capacity across the network? Are you moving capacity from old centers and closing those down?

Or what's the management of the network?

Right now, we're opening new warehouses to ensure that we have created the -- what we said, the capabilities and the capacities to grow and grow in a way which is then truly then enabling the omni setup we have with stores and the digital store sort of combined and through the customer demand more clearly than served through a more flexible logistic network.

And we work both how we optimize own operated 3PL as well as where we -- how far we go on automation, and that's different depending on sort of the different circumstances. Full strategic network puzzle that we're working on.

Thank you for clarifying. And I take it we don't have any more questions in the room either.

So with that, thank you all very much for joining today's conference and for your continued engagement with the H&M Group. We wish you a very nice day.

Thank you so much.

Thank you.