H&M profit improves as Persson family’s 68% stake revives buyout question

H & M Hennes & Mauritz AB (Nasdaq Stockholm: HM B) has delivered a stronger fiscal third-quarter profit just as the founding Persson family’s continued share purchases intensify speculation about the retailer’s long-term ownership structure. Operating profit for the June-to-August quarter rose to SEK6.04 billion from SEK4.91 billion a year earlier, while net sales edged up to SEK57.19 billion and local-currency sales increased 1%.

The earnings improvement came only one day after Reuters highlighted the Persson family’s growing ownership. Ramsbury Invest, the investment vehicle primarily controlled by Stefan Persson, had purchased another 36.8 million H&M shares during 2026, while the family and related companies owned 68.27% of total shares at August 31. Their control is even stronger through H&M’s dual-class structure: the Stefan Persson family controlled 84.91% of voting rights at the same date.

No take-private proposal has been announced. Ramsbury Invest declined to comment to Reuters on any such plan and said the Persson family remained long-term owners who had historically increased their ownership. The distinction is important because rising family ownership is factual, whereas an eventual delisting remains speculation unless the family itself makes a formal move.

Why has the Persson family’s H&M stake become such a big market question?

The ownership trend has become difficult for investors to ignore. Reuters reported that the family and related entities owned 49.5% of H&M at the beginning of 2021, compared with more than 68% by August 2026. The latest official shareholder data puts the Stefan Persson family alone at 1.092 billion shares out of approximately 1.599 billion issued shares.

Under Swedish rules, a shareholder reaching 90% ownership can trigger compulsory acquisition of the remaining shares. Reuters cited Sverre Linton of the Swedish Shareholders’ Association as viewing the continued accumulation as consistent with a gradual buyout strategy, while Deutsche Bank analyst Adam Cochrane was reported as expecting the family to take H&M private by 2030. Those are third-party interpretations, not confirmed plans from the Persson family.

The reason the speculation persists is straightforward: family control is increasing while the public-market valuation has struggled to regain its previous highs. Reuters noted that H&M shares had lost more than half their value since their 2015 peak, even as management worked to restore margins and improve product relevance.

From the family’s perspective, increasing ownership while valuations remain depressed can be economically rational even without a predetermined delisting strategy. Each purchase raises exposure to future earnings, dividends and any successful turnaround. The same transactions, however, reduce the freely traded portion of H&M and move the family gradually closer to the threshold that would make full private ownership easier to execute.

Did H&M’s third-quarter results finally show that the turnaround is working?

The answer depends on which part of the income statement receives the most weight. Profitability improved substantially. Third-quarter operating profit climbed 23% to SEK6.04 billion, the operating margin widened to 10.6% from 8.6% and after-tax profit increased to SEK4.10 billion from SEK3.21 billion. Cash flow from operating activities rose 19% to SEK11.91 billion.

Reuters noted that the operating-profit figure also beat the approximately SEK5.14 billion average analyst estimate compiled by LSEG. That is a meaningful earnings beat and shows that chief executive Daniel Ervér’s emphasis on sourcing efficiency, cost control and more disciplined operations is producing results.

Yet sales remain the harder part of the turnaround. Net sales in Swedish kronor increased only marginally, while local-currency growth was 1%. H&M achieved that with roughly 2% fewer stores than a year earlier, which gives the figure some additional quality, but it still does not amount to the kind of top-line acceleration that would decisively change the competitive narrative.

For the first nine months of fiscal 2026, reported net sales declined to SEK161.62 billion from SEK169.06 billion, although local-currency sales were broadly flat. Operating profit for the nine-month period improved as the company reduced costs and lifted gross margin.

That is the essential tension in H&M’s turnaround: the business is becoming more profitable before it has clearly become much faster-growing.

How much of H&M’s margin improvement was genuinely operational?

This question matters because the headline increase in third-quarter margin included a significant one-time benefit. H&M said its 54% gross margin was boosted by approximately 1.6 percentage points from tariff and goods-import effects that had raised the cost of sales in earlier quarters. The same approximately 1.6 percentage-point positive effect flowed through to the operating margin.

Removing one-off effects does not erase the progress. Selling and administrative expenses fell 1%, while purchasing, cost control and operational efficiency improved. But the adjustment means investors should not simply annualise the 10.6% third-quarter operating margin and assume that level represents the new permanent profitability baseline.

Inventory also deserves attention. H&M ended the quarter with SEK39.36 billion of inventory compared with SEK37.94 billion a year earlier. The company attributed the increase partly to more goods being in transit because of global supply-chain disruptions and temporary effects from consolidating its European logistics network.

For a fast-fashion retailer, inventory quality matters almost as much as inventory value. Merchandise that reaches stores too late can require discounting, which then undermines gross margin. H&M said the composition of inventory remained good, but the next few quarters will show whether higher stock converts into full-price sales or markdown pressure.

Why is H&M still struggling to generate stronger sales growth?

Competition is exceptionally intense. Reuters highlighted pressure from Inditex, the owner of Zara, as well as ultra-low-cost online retailer Shein. Each competitor attacks H&M from a different direction: Zara has built a reputation around fast design-to-store execution, while Shein uses digital distribution, data-driven merchandising and extremely aggressive price points.

H&M sits between those models. It operates an enormous physical retail network and global sourcing platform, but it must keep stores relevant while matching the digital convenience and trend velocity of online competitors.

Daniel Ervér took over as chief executive in January 2024 with a mandate to strengthen the brand and improve profitability. Cost actions have clearly progressed, but customer demand has been less responsive. Sales fell 1% in the first quarter of fiscal 2026 and were flat in the second before the 1% local-currency increase in the third.

This is why the latest earnings do not completely resolve the turnaround debate. A retailer can improve margins for several quarters through sourcing gains, store closures and expense discipline, but sustainable earnings growth eventually requires healthy revenue.

H&M expects September sales to rise approximately 1% in local currencies, suggesting that the fourth quarter is beginning with roughly the same modest top-line momentum seen during the third.

Would taking H&M private make strategic sense?

Private ownership could theoretically allow management and the Persson family to make longer-term investments without having every quarterly sales fluctuation immediately reflected in a publicly traded share price. That argument was raised by investors cited by Reuters, but it remains an external interpretation rather than an announced Persson strategy.

Retail turnarounds often involve uncomfortable trade-offs. Closing stores can protect profitability while reducing reported revenue. Investing heavily in logistics, digital technology or store refurbishment can depress near-term cash generation before benefits become visible. Private ownership can make such transitions easier because management is not continually balancing those investments against public-market expectations.

The counterargument is equally important. Public listing provides transparent valuation, market discipline and liquidity for minority shareholders. Any take-private offer would need to provide those investors with sufficient compensation for surrendering future exposure to a potentially stronger H&M.

The Persson family’s current 68.27% economic ownership means buying the remainder would still require substantial capital, even though the family already has overwhelming voting control. Reaching the 90% compulsory-purchase threshold would require a much larger economic stake than it holds today.

What does H&M stock sentiment say after the profit improvement?

H&M shares did not respond to the earnings beat with an unambiguous rerating. Market data through September 25 showed the shares still down for 2026, while Reuters’ reporting before the results emphasised that the stock remained more than 50% below its 2015 peak.

That subdued response tells investors something important. The market already understands that H&M can cut costs and improve sourcing. The unresolved question is whether those actions can reignite sustained sales growth and regain competitive momentum.

A stronger sales trajectory would make the company more valuable regardless of ownership structure. It would improve public-market sentiment while simultaneously increasing the value of the Persson family’s enormous holding. Conversely, continued share-price weakness could make additional purchases economically attractive to a family with a very long investment horizon.

That creates an unusual alignment of possibilities. A successful turnaround could lift H&M shares and reduce the apparent attraction of a take-private transaction, while a slow recovery could allow the Persson family to continue increasing ownership at lower valuations.

For now, the facts support two conclusions but not a third. H&M’s profitability has improved materially, and the Persson family continues to increase its ownership. They do not yet establish that a formal privatisation plan exists.

The next important signals will therefore come from sales growth, future Ramsbury Invest share purchases and any change in public statements from the family. Until then, the ownership story and the operating turnaround will remain inseparable parts of the H&M investment debate.