Swedish fashion group H&M posted stronger-than-expected third-quarter results on Thursday, reporting a sharp rise in operating profit. However, the retailer also warned of rising tariff-related costs and forecasted flat sales in September, indicating continued margin pressure ahead.

Operating profit for the June–August period reached 4.91 billion Swedish crowns ($523 million), up from 3.51 billion a year earlier and surpassing the average forecast of 3.68 billion Swedish crowns in a poll by LSEG analysts. This was supported by a 2% increase in local-currency sales.

“The autumn collections have been well received,” H&M said in a statement.

Despite this positive trend, H&M cautioned that U.S. tariffs on imports are expected to have a larger impact on gross margin in the current quarter,

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