H & M Hennes & Mauritz AB (publ)

morning and welcome everyone to H&M Group's conference call nine month report for 2025. For the first part of this call all participants will be in a listener only mode during the speaker presentation and afterwards there'll be a question and answer session. If you wish to ask a question please register by the link in the confirmation email and then dial in and press star followed by one on your telephone keypad. Please be advised that this conference is being recorded. Today, I am pleased to present Josef Aalberg, Head of Investor Relations. I will now hand over to our speakers. Please begin.

Good morning and warm welcome to everyone. Today, we present the third quarter results for 2025 for the H&M Group. I am Josef Aalberg and I'm Head of Investor Relations. Before I hand over to our CEO, Daniel Erver, I would like to share this morning's setup. As usual, Daniel will share a short summary of our results, a run-through of selected highlights from the quarter as well as a brief outlook. Then we will continue with a Q&A where Daniel, our CFO Adam Karlsson and I will be available to answer your questions. So with that please go ahead Daniel.

Thank you Josef and good morning to everyone. It's great to have the opportunity to speak to all of you again. In the third quarter, we continued to take important steps in the right direction. So let me start by summarizing some of the key numbers from the quarter. The positive sales development continued in the third quarter. Sales grew by 2% in local currencies. And this growth should be seen in the context of having 4% fewer stores at the end of this quarter compared with the same period last year. Our upgraded online store rollout earlier this year has been very well received by our customers around the world, contributing to a profitable growth in the quarter. Inventory continued to develop in the right direction and decreased by 9% in SIEC compared with last year. And that's mainly thanks to an improved demand planning capabilities as well as in combination with a well-executed summer sale. The composition of the inventory is good and we see further opportunities for improvement in the fourth quarter. Sales for the month of September are expected to be on par with last year and this should be seen in the light of high comparative sales figures from the previous year. We increased our operating profit compared with the same quarter last year thanks to a stronger customer offer Good cost control and improved gross margin, where a clear majority of the effect was driven by improvement work in our supply chain, as well as somewhat positive external factors. Additionally, currency exchange effects were positive for the gross margin development in the third quarter. This means that we reached an operating profit for the third quarter of 4.9 billion Swedish kronor and this corresponds to an operating margin of 8.6% up from 5.9% during the same quarter last year. The increase in profit shows that we are on the right track as we continue to make progress in line with our plan to create fantastic products with outstanding value for money, inspiring experiences and strong brands. That we are on the right track was also reflected in the response we got from customers when H&M opened in Brazil for the first time in August. I had the opportunity to join the team on site and seeing the pride of our colleagues, the reception in social media, and above all, the excitement of customers entering our stores for the first time was absolutely remarkable. We successfully built on the core of our plan with elevated products, inspiring experiences, and a strong brand, and combining these strengths with a deep curiosity for the local markets. Please take the time to enjoy a short video from the opening. I hope you could feel some of the energy that we felt by being there. And based on this positive reception from our customers and the opportunity in a well-established fashion market, it's a good potential to grow both in Brazil and in other parts of Latin America moving forward. With two stores and online already in place, we will open one more store in Brazil during this year. Additionally, four stores are signed for 2026. all in top locations in important cities, including the first store in Rio de Janeiro. Another highlight this quarter was the opening of our new flagship store in Le Marais in Paris, which you can see on the left screen in front of you. This store has an assortment presentation and interior that is curated for this special location. And this is a great example of how we strengthen the brand while we are also creating an inspiring shopping experience in one of the world's most important fashion capitals. We continue to elevate our shopping experience both in stores and digitally as well as strengthening the integration between both of these channels. As a part of this, we will continue to upgrade a large part of our physical stores worldwide with improvements in layout, presentation and tech features. In parallel with improving the customer offer, we continue to drive our sustainability agenda forward and we are making clear progress towards our ambitious goals as we continue to integrate sustainability into all parts of our business. And this morning, Fashion Revolution released their results from the latest What Fuel Fashion 2025 report. Out of 200 major fashion brands and retailers, H&M ranks first for its level of public disclosure on decarbonization and other sustainability areas. Finally, I would like to share two great fashion moments from this quarter. First out, COS returned to New York Fashion Week for the fourth year in a row. underlying their ambition to build a global power brand in the accessible luxury category. The strong autumn-winter collection emphasized materials, contrast, and craftsmanship. And last week, H&M opened London Fashion Week by presenting the new autumn-winter collection. The show clearly highlighted the strength of H&M's collections and the creativity of our in-house design teams, featuring both women's wear and men's wear. The collection is now available in stores and online with a wide range of price points to cater for a diverse set of fashion needs. With leading models on the catwalk and many well-known guests in the audience, the show also included a special performance by British music talent Lola Young featured here on the right.