H & M Hennes & Mauritz AB (publ)

Good morning and a warm welcome to everyone. Today we present the second quarter results for 2026 for the H&M Group. My name is Josef Ahlberg and I'm head of investor relations. Before I hand over to our CEO Daniel Erviger, let me briefly outline today's agenda. As per usual, Daniel will start by sharing a short summary of our results. Our CFO, Adam Karlsson, will then provide a more detailed financial review. And after that, Daniel will walk you through selected highlights from the quarter and provide a brief outlook. We will end with a Q&A session where Daniel, Adam and I will be available to answer your questions. And with that, please welcome Daniel.

Good morning everyone and a warm welcome to those of you who are joining us online but also those who are joining us here in the room on this beautiful summer morning in Stockholm. Before we start I just want to take the opportunity to recognize that I think all of us woke up this morning to the news from Venezuela and we have spoken to our teams on site and we are PLEASED TO HEAR THAT NO WE HAD NO CASUALTIES AND NO INJURIES AND WE WERE ABLE TO EVACUATE OUR STORE ON TIME BUT BEYOND THAT OUR THOUGHTS ARE OF COURSE WITH THE VENEZUELAN PEOPLE AT THIS POINT IN TIME SHIFTING THEN THE FOCUS BACK TO H&M AND TO THE FIRST HALF YEAR OUR CONTINUED LONG-TERM WORK DEVELOPED A SOLID PROFIT DEVELOPMENT THROUGH THE FIRST HALF YEAR AND LOOKING AT THE SECOND QUARTER SPECIFICALLY WE CAN SEE THAT WE DELIVERED A 12% profit margin, excluding the one-time costs that we speak about in the report. The improved profitability comes from improved gross margin. It comes from strong operational efficiency throughout the organization, and it comes through very solid cost control throughout our different markets around the globe. We can see that the one of course that we speak about this morning they are related to an organizational change and the purpose of the change is to make sure that we become more relevant for our customers by becoming close to our customers and move mandate and decision making closer to our customers so we take quicker decisions to become more relevant to the 81 different markets that we have across the globe. Looking at our operating margin on a 12 month rolling basis, it increased two percentage points and reached 8.5% including the one time costs for the last 12 months. And while we are satisfied with the profitability, we are happy to see stock going down 10%. We are still not yet where we want to be when it comes to sales. Looking at the quarter, it came in fairly in line with last year's sales and that's with 3% fewer stores and the 3% fewer stores is a result of the ongoing optimization of our store portfolio that continues. Looking at the month of June, we estimate June to come in on par with last year. The sales performance in the quarter is a reflection of a number of different factors. The first being while we're very happy about the improved stock efficiency that we see, we can see and recognize that throughout our business there are pockets across product types, price groups, markets where we came in slightly short on supply in relation to the demand that we could see. Secondly, this quarter has been a difficult quarter for Western Europe. We could see a deterioration or a lower consumer confidence across several of our key markets in Europe that affected sales. In Europe, we also are working on consolidating our logistic network, and that led to some disturbances and lower availability for our customers, especially in the month of May and June in Western Europe. Thirdly, it's a week quarter for portfolio brands, and that's related mainly to two different things. The first one being that we closed all our monkey stores into 2025, and that still has an effect. And the second one being that portfolio brands had a big focus on full price sales in this quarter, which affected the top line performance. And then we're happy to see that portfolio brands are back to growth in the month of June. With that first short summary, I will hand over to you, Adam, to go more into the details of the financial performance.

Thank you very much, Daniel, and good morning, everyone. As Daniel highlighted, we have made progress in strengthening our profitability, but we have more to do when it comes to sales. Online sales, however, continue to grow and we have come the furthest in that channel with the ambition to elevate the customer experience. The store channel saw a more varied development. We had around 3% fewer stores compared to last year as our optimization work across the portfolio continues. We're also upgrading our existing store base and we see sales uplift in the stores that we have touched so far. And this work, however, is still at an early stage. And in the second half year, we will broaden the rollout of a larger share of stores. Looking at the regions, sales in local currency sequentially increased or remained stable in Q2 versus Q1 in all regions except Western Europe. And we're happy to see that we're improving performance in both Southern Europe and in Asia. The initiatives that we've taken so far to consolidate our supplier base and deepen our strategic partnership with our suppliers continue to support gross margin. Gross margin increased by 120 basis points to 56.6% compared to 55.4% in Q2 last year. External factors affecting the gross margin remained somewhat positive and costs for markdown were in line with previous years. Looking at the rolling 12 months, we now are at a gross margin of 54.1%, which means that we're also in the range of what we have called a more normalized gross margin of 54 to 55%. And this is an important building block to reach our long-term ambition and target to have a double digit EBIT margin. Cost control remains an important focus area, and we have delivered good productivity improvements throughout the quarter, including the one-off cost, selling and administrative costs grew by 1% in local currencies compared to the same quarter last year, excluding the one-off costs of 679 million SEK that we've taken in the quarter, and that is, as Daniel said, related to organizational changes, the cost base decreased by 2% in local currencies. This decrease is mainly the result of lower selling expenses supported by logistic efficiencies, optimization of our store portfolio and a more efficient use of our marketing resources. Taken together, this drove a significant improvement in our operating profit in the quarter and excluding the one-offs. The margin for Q2 was 12% compared to 10.4% in the second quarter of 2025. Looking at the role in 12 months and including one-offs, the operating margin increased to 8.5%, up from 6.5%. And during the quarter, then excluding the one-Off, it reached 8.8% over the past 12 months. If we take a look at the inventory, the stock in trade is now at 15.8% of sales versus 16.6% in the same time last year. The inventory composition is considered to be good going into Q3 while we then continue to improve precision, demand planning, buying and stock management. So let's take a step back and look at the structural journey that we've done over the last years. As you can see in these two graphs, it's clear that through focused execution, we have strengthened both our profitability and our operational foundation. This improvement is demonstrated in gross margin and inventory levels here to the left and in the operating margin to the right. And this progress enables us to continue to strengthen our customer offer and become faster and more customer focused. We can also see that key value drivers such as return on capital employed and earnings per share are building a clear momentum. Over the past three years, the rolling 12 months return on capital employed has increased by over 11 percentage points to 17.4% and the EPS has increased more than 260% over the same period. In addition to the improved profitability, they also demonstrate a stronger capital efficiency and a more disciplined execution across the business. Again, highlighting the stronger operating model that we have today. As these improvements continue, they increasingly underpin our ability to create sustainable value over time. Turning to our financial position. Leverage remains inside the net debt to EBITDA target of one to two times. Cash conversion is strong and helped by good progress in active working capital management. We have a high degree of financial flexibility and liquidity buffer to secure that we can navigate volatility and to capture future opportunities. In the second quarter, we completed a share buyback program of 1.4 million shares worth around 220 million SEK for this year's long-term incentive program. And in line then with our financial policy, we continue to return capital to shareholders through dividends and with the first installment paid out now in May and the remaining part to be paid out in November. So with that said, I'll hand back to you, Daniel, to take us forward. Thank you.