H&M shares jump as turnaround gains take hold after 135 store closures

H&M reported that its turnaround is starting to pay off, with sales and profit rising in the three months through August. The retailer said sales advanced 2% to £4.51 billion, while operating profit climbed 39% to £390 million, signaling early traction from its repair plan amid a challenging global retail environment.

Cost-cutting and the group’s strategic reset included closing 135 stores over the past nine months, including 21 shops in Western Europe, as it seeks to pare back underperforming outlets and streamline its footprint. The results come amid intensifying competition from Inditex, owner of Zara and Pull&Bear, and from the fast-fashion online rival Shein. Back on the UK High Street, Marks & Spencer has also shown renewed momentum with younger shoppers choosing the retailer more often.

Daniel Erver, H&M's chief executive, said the group was "taking further steps in the right direction" and that the rise in profit shows the plan is working. "In an environment of ongoing uncertainty with cautious consumers, all of us within the H&M group are consistently focusing on our customer offering - always giving the best value for money," Erver added.

Investors appeared to take the update in stride. On the Stockholm stock market, H&M shares were up about 8.75% in afternoon trading, underscoring optimism that the turnaround may be gaining momentum. Russ Mould, investment director at AJ Bell, described H&M as "on the comeback trail" and credited cost discipline and the repositioning toward trendier, value-conscious offerings. "It is fighting off competition and upping its game with designs that encourage shoppers to keep coming back for more," Mould said.

Analysts note that Shein's rise has forced traditional retailers to rethink positioning; H&M is balancing price with style to avoid discounting too deeply. The company’s strategy contrasts with price-competitive tactics used by discounters, and early evidence suggests the approach may be paying off. Earlier this month, H&M’s London fashion week show featured models including Alex Iris Law and Lila Moss, signaling its continued push into more high-energy, trend-focused collections.

Looking ahead, H&M’s executives say the plan centers on value, store rationalization, and improving product assortment to appeal to cautious consumers as the competitive landscape remains intense. The company faces continued pressure from fast-fashion rivals and changing consumer habits, but executives say the current quarter’s results provide a foundation for sustainable improvement as the group presses ahead with its revamp.