H&M: More meaningful recovery possible in 2027; Bringing production closer to key markets should improve flexibility. Heavy promotional activity may dilute brand perception, but investment in store refurbishment should help counter this effect.

After interviewing a number of executives in the fast fashion space, Yanmei Tang, Analyst at Third Bridge made a series of remarks regarding H&M, informed by insights from industry experts:

Our experts say 2026 is likely to remain a challenging year for H&M as weak consumer confidence continues to weigh on spending across many of its key markets. While geopolitical tensions and supply chain disruption have added uncertainty, there are early signs that some of those pressures are beginning to ease. If freight and sourcing conditions continue to improve, our experts believe the industry could see a more meaningful recovery in 2027.

H&M may not be winning the race on speed to market, but it is in a much stronger position on profitability, inventory discipline and supply chain resilience than it was a few years ago. Bringing production closer to key European markets should improve flexibility.

Heavy promotional activity across the apparel sector remains a risk for H&M. Discounting may help drive sales in the short term, but it can also dilute brand perception over time. However, ongoing investment in store refurbishments and improving the in store experience should help H&M maintain customer loyalty.

H&M is much better prepared for disruption than it was a few years ago. Lower inventory levels, improved supply chain planning, RFID technology and more data driven buying decisions have helped improve stock productivity. As a result, our experts expect inventory to remain stable or gradually decline, reducing the risk of excess stock and heavy markdowns if demand remains weak.