Good morning, and a warm welcome everyone. Today we present the first-quarter results for 2026 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 Ervér, I'd like to share this morning's setup.

Daniel will share a short summary of our results, walk you through selected highlights from the quarter, and provide a brief outlook. We will then open up for a Q&A session where Daniel, our CFO Adam Karlsson, and I will be available to answer your questions.

With that, please welcome Daniel.

Good morning everyone, and thank you so much for joining us today. In the first quarter, we continue to make important progress in a quarter marked by a cautious consumer and large currency translation effects.

Overall, our profitability continues to improve. The rolling 12-month operating margin increased to 8.4%, up from 7.0% last year.

Looking at sales, sales decreased with 1% in local currencies during the quarter. This was mainly driven by weaker demand in December, following strong Black Friday sales in November, combined with around 4% fewer stores and a continued cautious consumption in several of our key markets.

In addition, sales in SEK were negatively impacted by a currency translation effect of 9 percentage points. As the quarter progressed, we have seen a positive reception of our spring collections so far, contributing to improved sales development in February and in March.

For March, we expect the group sales to increase by 1% in local currencies compared to the same month previous year. Turning back to profitability, we continue to see improvements.

Gross margin increased to 50.7%, and operating margin improved to 3.0% from 2.2% last year. We continue to see positive effects on gross margin from supply chain improvements and reduced markdowns as a result of increased precision in inventory planning.

Combined with good cost control, this supports overall profitability. Overall, this reflects a disciplined execution across several areas of our business.

All in all, we are on the right path and continue to build a strong foundation. As said, we focus on strengthening our customer offering through product, experience, and brand, while we maintain good cost control.

At the same time, we continue to remove layers, shorten decision-making paths, and move decisions closer to the customer. Initiatives that both increase speed, but also relevance in how we operate.

Starting off then with our focus on product. Shorter decision-making paths, together with closer supplier collaboration, allows us to increase the share of in-season buying.

Something that also helps us to respond more quickly to customer demand and market trends, and to create a more relevant assortment. Combined with improved demand planning, this has contributed to higher inventory productivity at the highest level in 10 years in relation to sales, and reduced working capital during the quarter.

As we now move into the spring, we see that the inventory composition is good. Moving on to our focus on the customer experience, we continue to optimize our store portfolio and roll out store updates.

As one milestone, we will reopen our iconic flagship store on Hamngatan here in Stockholm on April 10th. At the same time, we also continue to expand, for example in Latin America, where we will open in Rio de Janeiro in April and later on this year in Paraguay.

On the digital side, we continue to develop our digital store, improving search, ranking, and checkout to make it easier for our customers to find what they want and what they are looking for. We are also making progress within AI, increasing the speed of code production, and automating how we interpret and integrate data.

All together, this enables faster, smoother, and a more personalized customer experience across our digital channels. Turning then to our third focus, brand and marketing.

We continue to strengthen relevance through strategic initiatives and collaborations. Examples that we have seen in this quarter includes H&M Red Stitch, the collaboration with Stella McCartney, and the custom H&M design worn by Ji-hoon Kim at the Academy Awards.

Just yesterday, we saw a fantastic fashion show from COS in Seoul. In parallel with these branding initiatives, we continue to increase the precision of our marketing investments.

Now before we move on, I would like to share some of the highlights from the quarter. Please enjoy.

Let me also touch on our sustainability work. Today we are publishing our annual sustainability report.

As we mentioned in the last quarter, we continue to make steady progress towards our targets. Our absolute Scope 3 emissions decreased by 34.6% in 2025, keeping us on track towards our 2030 targets.

This is supported by an increased use of lower-impact materials and strong, long-term supplier partnerships. The share of recycled materials increased to 32%, and 91% of the materials are now from recycled or sustainably sourced sources.

Moving on to a brief recap of our financial outlook. The financial outlook for the year remains, and we would like to highlight that for the second quarter, we estimate the overall effects of external factors on the gross margin to remain somewhat positive compared with last year.

Although current geopolitical instability in the Middle East could, if extended, result in slightly additional cost pressure. We do not intend to continuously push gross margins beyond the normalized levels of 54% to 55%, which we are now approaching.

We will reinvest where it makes the biggest difference, for example in quality improvements, in in-season buying, and in competitive pricing to stay really competitive and relevant for our customers. We expect the cost of price reductions as a percentage of sales in the quarter to be somewhat higher than the same period last year.

We see that the improved inventory productivity and good inventory composition enable us to lower end-of-season sale. We also, at the same time, see a more cautious and selective consumer, and their behavior triggers us to increase the need for using temporary activations and deals.

On SG&A and as previously communicated, we have the ambition to grow SG&A at a low single-digit in local currencies for the full year 2026. Here with the implementation of new tech infrastructure that will result in a somewhat increased cost pressure throughout the year, while our focus remains on enabling good cost control through efficiency measures, including a continued work on the store portfolio optimization, implementation of a more efficient organization, warehouse network optimization, and a disciplined allocation of resources to the areas of the highest business impact.

To summarize the outlook, we continue to take important steps in the right direction. We make selective investments in product, brand, infrastructure, and store portfolio, while we maintain good cost control.

Always with the customer in focus, so that we can offer relevant and current fashion at the best value for money. With our global footprint, a solid balance sheet, and a diversified supplier base, we have the resilience to adapt quickly to changing conditions.

We continue to build the foundation for long-term, profitable, and sustainable growth. Thank you for listening, and I will now hand you back to Joseph for the Q&A.

Thank you, Daniel. We will now start the Q&A.

Please state your name before asking your question and try to limit yourself to one question at a time with a maximum of two questions per participant, we can answer them one by one and make sure that we have time to answer all of your questions. Over to the operator to please facilitate the questions.

Yes. Good morning Daniel and Adam and Joseph, hopefully you can hear me.

Maybe just I think you surprised everyone a little bit both on the gross margin and then the opex and the cost control there. You did say in the Q4 report, and you reiterated that today, that you expect opex in local currencies to grow low single-digit, and sort of that, of course, related partly to the platform rollout that's going to be gradual throughout the year.

Have you so far been able to neutralize that effect, or hasn't it come yet through lower handling costs given the inventory level, or what's the reason for opex being down also in this quarter?

Hey, good morning. Adam here.

Yes. You're right.

We see the inventory productivity, of course, supporting operational cost and particularly within the logistics side, so that is supporting us. To your first question then, we don't see the effects of these platform investments to show up yet, but rather, as we spoke last time, towards the second half of the year.

Positive effects of good inventory productivity, particularly within the supply chain, and then the full-year guidance is somewhat then H2-heavy connected to the platform investments.

Okay. That productivity, could that be something that could play out also in Q2, and then as we are getting into the second half of this year, that's going to be neutralized by the tech investments?

Is that how to view it?

Exactly. We see one of the benefits of, of course, the work that we done throughout the supply chain with higher precision is that we also not only over time will reduce stock levels, but it also affects productivity, and we see that it has during the first quarter and we estimate that it will continue to do so coming quarter.

Okay. Then my second question is on the Middle East.

I know your exposure is very small. I think it's 3% of your store network and maybe even less of sales.

Still, has that been sort of something that has been rocking the boat a bit when it comes to March trading?

This is Daniel. First, important for us to recognize the severity of the situation.

We are being working closely with our partners, of course, to protect the safety of customers and colleagues in the region. As you mention, our exposure with that said is fairly small.

You're right, 3% of the number of stores in the region. We also have low share of air freight in our full supply chain, so that has also had a minor impact so far.

On a global scale, we don't see any significant impact on the consumer behavior at this point in time, although we are very well aware of that the consumer has been under high inflationary pressure for a long period of time, and increasing energy prices will have a spillover effect. We see that that could have, if the conflict is sustained, a significant impact on the consumer behavior.

We're not in a situation where we can make predictions about that at this time. For the current trading of March, we don't see any major impact apart from the effects in the affected region.

Okay. Thank you so much.

Thank you. Good morning.

Maybe first to follow up on the last question on demand, but more maybe pinpointing the US market and current trading, I guess I'm curious to hear whether you've seen any signs of market demand weakening during the last few weeks as a result of all the geopolitical events and inflation worries and etc, etc.

No, we don't see any short-term effects that are worth to point out. We do see that there has been a surprisingly strong demand in the US for the full of 2025, that has also continued into 2026, where we had a prudent planning going into this year as of the leaving April and the tariff situation.

We have not been supplying fully to the demand that we could see in the US. We have worked on sort of increasing the supply to meet the customer demand, but we also been through a period of sale and end-of-season clearance where we also had a low supply in the US.

We have seen that's more things that are within our hands. We have seen a solid consumer demand in the US that has been stronger than we estimated in the middle of 2025.

Okay. Good.

Thanks. A second one on the Q1 gross margin.

Approximately how much of the 1.6 percentage point expansion was due to external tailwinds and how much was more, I guess, related to supply chain work and all that?

Majority was based on our work within the supply chain and the sourcing excellence approach that we have with consolidating suppliers and creating a stronger partnership with the top suppliers. Then, of course, we have other effects then going against us, such as the duty now fully in there.

Then we have currencies starting to trickle in as positive. The majority is based on our own work within the supply chain.

Okay. Thanks, Adam.

A short follow-up if I may on that. I heard what you said before, but I guess how should we think about ongoing gross margin progression as we look into the rest of the year?

I guess given that you guide for negative markdowns in Q2 despite the low inventory situation, and I guess external tailwinds are becoming less positive as well.

I think as Daniel said in the outlook, we are sort of targeting the interval and we believe that the sourcing excellence efforts give us a good shot at reaching that target interval, and we intend then to reinvest any sort of further upsides that may come from currencies and other external factors, and then of course need to balance it in the other way with the increased uncertainty regarding freight prices and energy prices. Looking ahead, we call out then that the net effect of these external factors will continue to be somewhat positive for Q2.

A fairly similar outlook compared to Q1 with the extended uncertainty, of course, of how the world around us evolves, particularly connected to transportation.

Great. Thank you.

Thank you very much. Can I ask a little bit about current trading and more specifically about your still biggest German market, where, as far as I can see, we've had six months of very weak statistics that have recently turned surprisingly positive in the last three, four weeks.

Is that something that you have seen in your sales as well, and any just granularity on differences in different markets? Are you seeing any markets that are improving more than others at the moment or vice versa?

We agree with your view on the last six months of the German market, that has been a tough market situation and tough consumer conditions. We see and assess that we have gained market share during this period of time in Germany, but of course it's still a challenging market.

Then on the short-term fluctuations, we also saw a stronger beginning of March. We have weather plays a big role during these months where you can have short-term fluctuations.

We also see this year that Ramadan is 10 10 days earlier than it was last year, so that falls in the beginning of March, it comes towards the end of March this year. There are some factors that make the single month difficult to comment on.

For the large scale, it's been a muted demand and we see that we have gained market share for Germany. Otherwise, to call out, we see Southern Europe has been strong for us.

We're happy with the development in Southern Europe, and we also see India as another example doing well. We're also happy with sort of the performance of South America.

There are some call-outs of positive developments.

Very clear, and thanks for the granularity there. On input costs, or external factors, your comment about expecting a slightly positive effect in Q2, is there any way you can put that in relation to the effects you've seen in the last three quarters?

Are you expecting more or less, and do you think there's a chance that some of this could linger into H2 as well, even when comparisons start to get more difficult?

If we try to decompose it somewhat and just look at where we are today, we see that currencies with the US dollar weakened relative to euro will continue, but that will sort of start to fade out when second half starts. We see fairly, as of yet, neutral material prices, but that's also, of course, connected to how input costs may vary with the energy prices.

That we sort of see as fairly neutral. Then the last piece is the shipping and the transportation questions that we see a big hike in air transport costs right now, but as we have a fairly low share of that, we feel that we are not particularly hard hit on it.

Then we just need to wait and see how the situation unfolds. The net effect of all of these is a slightly positive, and it's mainly driven by the currency effect that will then over the second half of the year slightly taper off as COGS gets tougher.

Very clear. Thank you so much.

Hi. Good morning.

Thanks for taking my questions. First one's maybe just on your inventory position, which is obviously improved quite significantly.

Do you have a target of sort of inventory days that you want to achieve over time?

Yes. We aim to continue to progress, although the pace that we have held over the last quarters is maybe not what we will see moving forward.

It needs to be built on structural improvements to our supply chain, to improved tech infrastructure, and so on to make sure that we really improve the productivity while maintaining good availability and makes it easy for the customers to find what they're looking for. That's a job that will continue.

Long term, we aim to be in the span of 12% to 14% as a share of sales, and that we see is something that continues to be an important target for us to continue to move on. The pace of progress will need to be matched with the capability building of increasing proximity sourcing, taking later decisions, increasing precision in the supply chains through a stronger tech infrastructure, but also a stronger supply chain network.

Great, that's clear. Then maybe just if you can give us some color on your performance by category, because I think you've previously said womenswear's been doing well, but that menswear was a bit lagging behind.

Is there any update to that?

Looking at the quarter, we are not satisfied with the top-line performance. We had higher expectations and had higher plans, and that goes for across the board for all the customer groups, including womenswear, we had a higher expectation for this quarter.

The improvements that we made around how we develop, how we really create an attractive, competitive assortment, all of that work started within womenswear, and we are taking that work to the other customer groups as well, and we see first good indications of getting traction also in the other customer groups. As the quarter is weaker than our own plans, that also goes for womenswear.

That's helpful. Thanks.

Then just finally, on agentic AI, how do you see H&M's position in this sort of agentic commerce world?

It's a very interesting topic which we are spending a lot of time on. We will have to learn and see how the world develops.

It's still very early days. We have been active on sort of integrating with the large language models for transactions as well, and we can see that there is a consumer interest, but it's a very, very early stage and a very, very minor part of the organic traffic that comes that way today.

We are exploring it. We know that our customer and all customers find fashion not always easy, and that you need guidance, you need clarity, you need help to pick what's right for you to express your personal style and the way you want to look, and there agentic AI can be a fantastic help.

We are exploring it, how it can support our own experience in our own channels, how we can, with agentic AI, help you to dress in the way you want, express yourself in the way you want, find the pieces that are good for you, but also how we will interact with agentic players that are brand agnostic and how we show up there. There we believe the most important thing is that we provide an outstanding value for money so that we become then the number one choice for more customers than only the ones who are in our ecosystem today.

Perfect. Thank you.

Morning. Thank you.

Just one for me, please, but it's a slightly longer question. When I look at the dollar moves, I see that the FX tailwind should actually be a very significant tailwind in the upcoming quarter and peaking in that quarter.

You only say that external factors should be slightly positive. Just wondering, what else are you building in that is offsetting this?

Is it tariffs still? Are you planning to do some price investments, and that's also built in, this is sort of your net expectation?

This is going back to your comment on pricing. You said earlier that you don't sort of intend to indefinitely keep growing your gross margin.

Just trying to understand what the offsetting factors are, because I think FX should be quite a big tailwind. Thank you.

Thank you for the question, Vandita. This is Joseph.

When we look at our guidance for the second quarter for external factors, we guide for a somewhat net positive effect for the second quarter. This is a similar guidance as the outcome that we have seen in the first quarter and also in last quarter in Q4 of 2025.

The main negative factor affecting us in Q1 is the cost for tariffs, which is the main year-over-year drainer. This is now expected to be at more or less full impact, but also when looking towards Q2, a negative impact of similar magnitude.

That is, on the negative side, the main factor. Then on the positive factors, we have the transactional FX support expected to support mainly on the positive side in Q2, like you point out, based on the buying that was done, to a large part, during 2025 at attractive dollar exchange rates towards our major selling currencies.

This is the key moving parts explaining our guidance.

Okay. Thank you.

Sorry, just one clarification. If you were planning to do any price investments, that wouldn't feature as part of your external factor commentary, right?

Because that's an internal decision.

That is correct. That's one of the internal decisions, one of many which are affecting the outcome on the gross margin.

What we guide on is the external factors.

Perfect. Thank you.

Morning, guys. A couple of questions, please.

When we're talking about your increase in promotional intensity, just want to confirm that's really because of the customer's maybe a bit uncertain, looking for a bargain. That is you having to put selective markdowns on current-season product more than you anticipate rather than having to clear through old inventory.

Is that correct?

Yes, that is correct.

Is there any big differences in that by region? Is there certain areas where the customer is becoming more, let's call it, price-sensitive than others, or is this more of a sort of global thing that you're seeing?

Across the globe there's been a strong inflationary pressure on the consumer for many years. Then, of course, there are certain markets where we see a higher pressure on the consumer spend and a weaker consumer market, and then it's more towards those areas.

It's a general consumer and our customer base have had a lot of inflationary pressure for quite some time, we see the need to activate, and the customer looking for making a good deal, and part of the customer base really wanting to find an attractive bargain. That piece of the customer base, we see a need to activate with temporary activations and yeah, tactical deals.

Because, over the last couple of years, it feels like the H&M stores have become less inventory density in the stores, they've looked cleaner, neater, tidier. You've got a philosophy, I think, of making the store experience better.

How are you going to try and manage that with increasing the promotional intensity in-store? Because it's felt like you've been trying to move towards more of a full-price, more fashion-led type customer base, but you sort of have to balance that with a certain bit of your customer who only reacts to buying on promotion?

It feels like it's quite hard to balance those two bits within the improving estate that you're aiming for.

No, it's correct. We're working very hard throughout the organization to really create an outstanding value for money, and that's many pieces.

It starts with, and the most important thing, is the product, what kind of product we develop, that's relevant, that it works with the best suppliers, the best materials, the trims, the components to really create an attractive product. Then put that in an environment that it deserves, an elevated experience that really shows the customer the value for money, but also helps the customer to navigate and find their piece regardless of if it's the physical store or digital.

That work is ongoing and we see that it's having a positive effect. With that said, we have a very large portfolio, we are into very wide demographics, and managing this change is equally important to always be aware about the consumer spending power and what customer base we have in which location.

That's what we look at when we try to navigate the right level of activations.

Great. Thank you.

Thank you. Good morning all.

Just had a question around de minimis in the US and potential learnings there for what is to come in Europe really in the coming months. I guess it's been seven months since that exception has been removed in the US.

It would be great to hear from your perspective what you think that's done to the US market competitively, and as you look into, I guess, more next year in the EU, what is to come in a few weeks' time means from your perspective, given the lessons learned from the US?

The US, as the market globally, is very, very fragmented with no single player having a large share, even if there are big impact on single players, there is still a very, very fragmented market and the total effect on the market is not significant. We do see that we have had a strong underlying demand in the US, which part can be contributed to that the low-price offer is under more pressure due to the de minimis being removed.

We see also that some of these competitors have shifted investments towards Europe to a large extent, which is a sign that it's probably been quite challenging market in the US. We are monitoring it and following it and seeing it as an opportunity for us, but at this point we don't do any forecast or quantification of that effect.

Understood. Thank you.

Good morning and thank you. If a quick ones about nearshoring, could you elaborate a little bit on how much have you moved to Europe?

Also on the same topic of your more, call it, strategic partners, how many of those are located in Europe? Thank you.

We continue to make efforts to really shorten the lead time, and that all the way from product development, fashion forecasting to the production, to shipment. Nearshoring is one of the important pieces of that puzzle, but the key for us is to shorten the full supply chain to take later decisions to provide a more relevant customer offer.

Here we are ramping up the efforts at a high pace. We do it mainly towards the current fashion pieces of the assortment.

We do it in womenswear, menswear, we're also exploring it for kidswear, but it's really on the most current fashion pieces of the assortment where we have a high pace of progress. Shifting to nearshoring is one piece of that, but it also comes to which suppliers we work with, which mode of transport that we use, and how we shorten also the development lead times to make these decisions at a later stage to become more relevant.

Do you have any strategic partners in Europe?

This is Adam. Yes, we do.

Sort of the partnership, it's a model where we then also have the benefit of having suppliers open factories and production units in multiple countries. When we speak about partners, around 30 of them, they're, of course, headquartered in different parts of the world, and that reflects sort of our general sourcing pattern.

We then have the opportunity for them to, under this partnership umbrella, to expand their business together with us to ensure that we have a healthy, robust, and very flexible supply chain infrastructure. We do have partners in Europe as well, but more importantly, it's how we together with them expand and collaborate both for speed, proximity, and, of course, price, quality, and sustainability.

Cool. Just a follow-up there.

You said shorten lead times obviously key thing. Could you give some maybe example or some context where is it today versus, say, three years ago?

Thank you.

In two aspects. One is the actual lead time where we now have capability to get the garment from idea to shelf in four to six weeks.

That is a capability that we built up to a larger extent than what we have had in the past. Then, even more importantly, it's how we change the operating model for how we do design, product development to really make sure that we have a high level of flexibility in the decisions that we make so that we can make those decisions at a later stage.

Having then a vast network of strategic partners with units in areas where we can take later decisions, but also with capability to help us to shorten the lead time is tremendously important, and that work is ramping up at a high pace during end of 2025 and 2026.

Cool. Thank you so much.

Yes, morning again. Just a follow-up, Daniel.

You mentioned the surprisingly strong US market, maybe on the back of what you feared sort of, I don't know, April, May last year. At the same time, if you just look at the numbers for Q1, Americas is actually down a little bit more than the group in local currency.

How does that stack up? Is that due to you not being able to cater to that demand, or what's the explanation simply?

We went into the second half of 2025 with a very prudent plan for the US given everything that was going on, and then we could see more resilience from the consumer than we expected, which led us to have a low supply to the demand. Then Q1 is a quarter with a big impact on end-of-season sale in December and January, and that's where we also said that we had far less end-of-season sale impact in the US market given that we have had a low stock level, a low supply to the demand.

That's the explanation for Q1.

Okay. Did you still see in that number for the entire Americas, you are seeing South America growing?

We see positive development in South America.

Yeah. A second question maybe.

You mentioned increased precision in your marketing investments. Does that also implicitly mean that you had less costs for marketing spend in the first quarter?

Slightly less spend on marketing. This is two shifts.

One is shifting more of the investments towards media, and then the way we optimize media both between markets and between different channels, and how we optimize the content per channel is where we drive the efficiency. As a level of spend, it was slightly less than the year before.

Do you see that efficiency continue into the coming quarters?

Yes, we do. At the same time as we evaluate cases for growth opportunity and where we want to invest, but the efficiency work we see has potential for the rest of the year.

Okay. Thank you so much.

Thank you.

Thank you. Sorry, I had some technical issues, apologize if these questions already have been asked.

Firstly, it seems that depreciation cost was quite low in the quarter. What is driving that and how should we think about the level going forward?

Yes, Adam here. There are multiple factors.

The underlying sort of core of the depreciation is attributed to investments primarily in our store portfolio. As we've had a couple of years of lower investment levels during COVID, one could sort of assume that that sort of core part will continue over the year.

As it's also related then to IFRS 16 and how we then value our leases and currency effects, it is difficult to predict, and we don't want to give guidance on it. At the core of it is that we've had a lower investment level into our portfolio during the COVID year, and that sort of funnels through in this.

Perfect. Thanks.

Also, can you say whether the online business is contributing to the higher EBIT margin that you are reporting year-over-year?

Adam here. Yes, it does.

We have the benefit of having two profitable channels creating a strong whole, but we see that an increasing share of online is good for long-term profitability expansion.

Thanks. Then just finally, can you say anything specifically on the performance in the Nordic regions, and more specifically whether you think you are gaining market share in that region in the quarter?

In the Nordics, we started to see a slight improved trend in the fourth quarter, but in the first quarter now, as similar to other regions, we saw a sequentially lower demand pattern. We saw a strong Black Friday period in many of the Nordic markets, like other European core markets, with the slower demand situation at the beginning of Q1.

That pattern has been consistent across several markets, including the Nordics.

Perfect. Thank you.

Thank you so much, and thank you to everyone for attending today's telephone conference and for your continued engagement with the H&M Group. To summarize the quarter, we are making important progress.

Profitability levels are improving, supported by good cost control and improved gross margin, despite this being a quarter marked by a cautious consumption and large currency translation effects. For us, this confirms that we are on the right path.

We continue to build the foundation for profitable and sustainable growth. As we move forward, we remain laser-focused on delivering the outstanding value for money by doubling down on product, experience, and brand for our consumers, at the same time as we continue to increase the flexibility and the precision across our operations.

All with the aim to really, truly offer our customers relevant fashion and current fashion at the best value for money. Once again, thank you for listening, and from here, we wish you all a wonderful day.

Thank you.