What Happened to H & M Hennes & Mauritz AB?
H&M, a Swedish multinational fashion retailer, is currently undergoing a significant strategic transformation, shifting from a volume-driven fast fashion model to one focused on profitability, sustainability, and an optimized retail footprint. This involves closing underperforming stores, expanding into new growth markets, heavily investing in digital channels and AI, and making substantial progress towards ambitious environmental targets by 2026. The company reported improved profitability in the first half of 2026 despite a slight decline in local currency sales, reflecting its strategic pivot.
Quick Answer
H&M is actively restructuring its global operations, prioritizing profitability and sustainability over sheer scale. As of mid-2026, the company is closing more stores than it opens, particularly in established markets, while expanding into new territories like Brazil and Paraguay. It has reported improved operating margins and significant progress on sustainability goals, including a 41% reduction in Scope 1 & 2 emissions and 91% recycled or sustainably sourced materials in 2025. H&M is also leveraging AI to enhance customer experience and design processes.
📊Key Facts
📅Complete Timeline14 events
Hennes Founded in Västerås, Sweden
Erling Persson opens the first store, 'Hennes' (Swedish for 'hers'), selling only women's clothing.
Acquisition of Mauritz Widforss and Name Change to Hennes & Mauritz
Persson acquires hunting apparel retailer Mauritz Widforss, leading to the inclusion of menswear and children's clothing and the company's renaming to Hennes & Mauritz, later shortened to H&M.
H&M Listed on Stockholm Stock Exchange
The company goes public, providing capital for accelerated international expansion.
First U.S. Store Opens in New York City
H&M begins its expansion outside of Europe with the opening of its flagship store on Fifth Avenue.
Plans to Close 5% of Stores Globally Due to COVID-19
H&M announces plans to close a significant number of stores in 2021 as a result of the pandemic's impact on retail.
Withdrawal from the Russian Market
H&M ceases operations in Russia following the invasion of Ukraine.
Daniel Ervér Appointed CEO
Helena Helmersson steps down, and Daniel Ervér, previously head of the H&M brand, is appointed President and CEO, signaling a strategic shift.
H&M Releases 2024 Sustainability Report, Nearing 2025 Targets Early
The report reveals 89% recycled or sustainably sourced materials and significant reductions in GHG emissions, positioning the company ahead of schedule for some 2025 goals.
H&M Announces Closure of Two Major Manhattan Stores by January 2026
As part of its global store optimization strategy, H&M confirms the closure of two prominent New York City locations.
H&M CEO Highlights AI Integration for Sales and Design
CEO Daniel Ervér discusses the company's increasing use of artificial intelligence to enhance customer guidance and creative processes, with designers embracing AI tools.
H&M Publishes 2025 Annual and Sustainability Report, Reports Q1 2026 Financials
The report details 91% sustainably sourced materials and significant emission reductions. Q1 2026 sees a 1% sales decrease in local currencies but a 26% rise in operating profit.
H&M Group Releases Six-Month Report 2026, Shows Improved Profitability
The report for December 2025 – May 2026 indicates a 1% sales decrease in local currencies but a 14% increase in operating profit (excl. one-time costs) and a Q2 operating margin of 12.0%.
H&M Confirms 128 Store Closures and Discontinuation of a Brand
As part of its ongoing restructuring, H&M announces a net reduction of 128 stores globally by May 31, 2026, and the phasing out of one of its portfolio brands to adapt to market shifts.
Further Details on 2026 Store Strategy: 90 Openings vs. 170 Closures
Reports confirm H&M's plan for 2026 to open approximately 90 new stores while closing around 170, resulting in a net loss of 80 retail locations, focusing on optimizing its footprint.
🔍Deep Dive Analysis
H&M, officially H & M Hennes & Mauritz AB, has been a global leader in fast fashion since its founding in Sweden in 1947. However, in recent years, particularly leading up to and including 2026, the company has embarked on a comprehensive strategic overhaul to adapt to evolving consumer behaviors, intense competition from ultra-fast fashion rivals, and increasing demands for sustainability.
The core of this transformation, accelerated under CEO Daniel Ervér who took the helm in January 2024, is a pivot from a volume-centric model to one emphasizing profitability and a more relevant customer offering. This involves a significant optimization of its global store portfolio. In the first half of 2026, H&M closed 128 stores, reducing its total count to 4,036 by May 31, 2026, compared to 4,166 a year prior. While closures are outpacing openings, H&M plans to open approximately 90 new stores in 2026, primarily in growth markets such as Brazil, Paraguay, and Argentina, signaling a targeted expansion strategy.
Financially, H&M has shown signs of this strategic shift yielding results. For the first half of the 2026 fiscal year (December 2025 – May 2026), net sales in local currencies decreased by 1%, but operating profit (excluding one-time costs) rose by 14% to SEK 8.1 billion. The operating margin for Q2 2026 strengthened to 12.0%, a 1.6 percentage point improvement, driven by a higher gross margin and stringent cost control. This indicates a successful move towards margin discipline over volume growth. Online sales continue to be a crucial component, accounting for over 30% of total sales.
Sustainability remains a key pillar of H&M's strategy. Its 2025 Annual and Sustainability Report, published in March 2026, highlighted significant progress. The company achieved a 41% reduction in Scope 1 and 2 greenhouse gas emissions and a 34.6% reduction in Scope 3 emissions against a 2019 baseline, putting it on track for its science-based targets. Furthermore, 91% of materials used in 2025 were recycled or sustainably sourced, with recycled materials alone reaching 32%, surpassing its 2025 target. H&M also invested SEK 2.8 billion in decarbonization and material innovation in 2025 and aims to fully phase out on-site coal boilers from its suppliers by the end of 2026.
Technological integration, particularly AI, is another crucial aspect of H&M's current strategy. The company is utilizing AI to enhance sales, provide customer guidance, and even in its creative design processes, with CEO Daniel Ervér noting that designers 'love working with AI' to create sharper designs and more relevant collections. This digital focus, combined with store optimization and sustainability efforts, aims to build a more resilient and profitable company in a highly competitive retail landscape.
What If...?
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