STOCKHOLM – H&M group’s Scope 3 greenhouse gas emissions reduced by at least 23 per cent in 2024 compared to a 2019 baseline, according to preliminary figures. The Swedish company announced the news as it unveiled its annual report.
The fast-fashion retailer reported weaker-than-expected fourth-quarter sales, attributing part of the decline to a late Black Friday. However, sales in December and January rose by 4 per cent, suggesting a stronger start to the new fiscal year.
CEO Daniel Ervér, who has been at the helm for over a year, stated that investments in marketing were beginning to yield results. The company’s operating profit margin for the fourth quarter, ending 30 November, widened to 7.4 per cent from 6.9 per cent in the previous year. “I’m pleased with the early progress, but I believe there is more potential for us,” Ervér said at a press conference.
H&M has faced challenges in expanding sales, as Chinese online retailer Shein continues to attract budget-conscious shoppers with ultra-low prices, while Inditex, the owner of Zara, has successfully maintained sales growth at higher price points.
In an effort to boost H&M’s appeal, Ervér has increased marketing spend and enlisted pop star Charli XCX to model the brand’s autumn collection and perform at free concerts in London during Fashion Week and in New York’s Times Square. First-quarter marketing expenditure is expected to rise year on year, though it will be slightly lower than in the fourth quarter.
“The question mark at this stage is whether these marketing efforts will pay off and drive sales growth acceleration in the coming quarters,” said Cedric Rossi, a consumer analyst at Bryan Garnier.
H&M’s fourth-quarter sales reached 62.19 billion Swedish crowns (€5.23bn), reflecting a 3 per cent increase in local currencies, yet falling short of the 63.48 billion forecast by analysts polled by LSEG.
After a year as CEO, Ervér expressed confidence in the company’s trajectory. He emphasised H&M’s commitment to its core business, prioritising improvements that significantly impact customer experience while eliminating inefficiencies. He highlighted progress in enhancing product quality, the shopping experience, and brand presence. Despite ongoing challenges, he outlined a strategic plan to drive long-term growth.
Sales grew by 3 per cent in local currencies in the fourth quarter compared to the previous year. The autumn collection, launched through events in fashion hubs such as Milan, London, and New York was well received. Gross margin and operating profit also improved, despite wind-down costs and increased investment in customer offerings, marketing, and store optimisation. Strong online sales, enhanced product presentation, an improved shopping experience, well-received womenswear collections, and effective cost control all contributed to a positive quarter. For the full year, the operating margin stood at 7.4 per cent, while earnings per share rose by 34 per cent to SEK 7.21.
Efforts to enhance the supply chain were accelerated, increasing flexibility and product availability across various channels. This included deepening partnerships with suppliers, streamlining the product development process starting with womenswear, refining demand forecasting, expanding nearshoring capacity, and further integrating RFID technology.
The company opened 88 new stores while continuing to optimise its store portfolio. With over 4,200 stores, upgrading the portfolio remains a key priority.
Organisational efficiency was also a focus, with team structures simplified to build a more effective operation. As part of this optimisation, H&M discontinued Afound during the year. Looking ahead to 2025, the company plans to integrate the Monki brand into Weekday, both in-store and online.
H&M remains committed to using its scale to drive sustainability in the fashion industry. The company aims to reduce greenhouse gas emissions by 56 per cent by 2030.