Key Morningstar Metrics for Hennes & Mauritz
- : SEK 169Fair Value Estimate
- : ★★★Morningstar Rating
- : NoneMorningstar Economic Moat Rating
- : MediumMorningstar Uncertainty Rating
What We Thought of Hennes & Mauritz’s Earnings
Hennes & Mauritz HM B released its six-month results on June 25, 2026, with local sales down by 1% and an increase in operating margins of 70 basis points to 7.1%. Results came in below our expectations. Shares traded 4% down intraday.
Why it matters: It came as a surprise that management cited an inability to fully meet demand as a drag on second-quarter 2026 sales, particularly as markdown levels remained unchanged. Together with muted third-quarter markdown guidance, we believe H&M’s turnaround continues to disappoint.
- Sales fell across all regions bar Southern Europe, with portfolio brands down 7% in the second quarter. While partly driven by Monki closures, the failure to push full-price sales reinforces our view of H&M’s lack of pricing power as consumers are trading down, not up.
- While gross margins improved, limited operating leverage left first-half margins below our forecast. Our estimates are unchanged; we expect store optimization to partly offset higher tech investments in the second half.
The bottom line: We maintain our fair value estimate of SEK 169 for no-moat H&M. Shares screen as fairly valued.
- Trading at a historical trough multiple of 21 times P/E, we view H&M as fairly valued. With management’s own guidance pointing to continued investment needs, compounded by intense competition and macro headwinds, we see little to drive a meaningful valuation rerating in the near term.
