H&M lifts Q3 operating profit 23% on purchasing gains while sales stay flat

Swedish fashion group H&M reported a 23% rise in operating profit for its third quarter, ended 31 August 2026, even though sales grew by only 1% in local currencies, Global Textile Times reported on 24 September.

Margins do the work

• Gross margin rose to 54.0% from 52.9% a year earlier; gross profit was up 2%.
• Operating margin reached 10.6%, against 8.6% a year earlier.
• Profit after tax rose 28%, and earnings per share reached 2.58, up from 2.01.
• Operating cash flow increased 19%.

About 1.6 percentage points of the margin improvement came from one-off benefits related to tariffs and import costs, reflecting higher costs booked in earlier quarters.

Chief executive Daniel Ervér said work "especially within purchasing, cost control and more efficient operations" had made the business more profitable. Inventory rose because of a higher value of goods in transit, which the company linked to global supply-chain disruption and ongoing consolidation of its European logistics, though it said the inventory mix remained healthy. H&M expects September sales to rise 1% in local currencies.

What it means for Egyptian exporters

H&M is growing profit through smarter buying rather than higher sales. For suppliers, that means continued pressure on price and efficiency, but also openness to sourcing locations that reduce tariff exposure and inventory tied up in transit. Egyptian factories pitching to H&M and similar European groups should lead with duty-free access to the EU, shorter shipping times that cut goods-in-transit, and reliable delivery, rather than competing on unit price alone.