Joseph Ahlberg: 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 Joseph Ahlberg and I am Head of Investor Relations. Daniel will start with a short summary of our results. Our CFO, Adam Karlsson, will then provide a more detailed financial review. 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. With that, please welcome Daniel.

Daniel Ervér: Good morning, everyone, and a warm welcome to those joining us online and here in the room. Before we start, I want to take the opportunity to recognize that I think all of us woke up this morning to the news from Venezuela. We have spoken to our teams on site, and we are pleased to hear that we had no casualties and no injuries and were able to evacuate our store on time. Beyond that, our thoughts are with the Venezuelan people at this point in time. Shifting the focus back to H&M and to the first half year — our continued long-term work delivered a solid profit development. Looking at the second quarter specifically, we delivered a 12% profit margin, excluding the one-time costs we speak about in the report. The improved profitability comes from improved gross margin, strong operational efficiency throughout the organization, and very solid cost control throughout our different markets around the globe. The one-off costs we speak about this morning are related to an organizational change designed to make us more relevant for our customers by moving mandate and decision making closer to them so we take quicker decisions to become more relevant in the 81 different markets we operate across. 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. While we are satisfied with the profitability and happy to see stock going down 10%, we are still not 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. The 3% fewer stores is a result of the ongoing optimization of our store portfolio. Looking at June, we estimate it to come in on par with last year. The sales performance reflects a number of factors. First, while we're very happy about the improved stock efficiency, there are pockets across product types, price groups, and markets where we came in slightly short on supply in relation to the demand we could see. Second, this quarter has been a difficult quarter for Western Europe — we saw a deterioration in consumer confidence across several of our key markets. In Europe, we are also working on consolidating our logistics network, which led to some disturbances and lower availability for our customers, especially in May and June in Western Europe. Third, it's a weak quarter for portfolio brands, related mainly to the closure of all Monki stores in 2025 and to portfolio brands having a big focus on full price sales this quarter, which affected top-line performance. We're happy to see that portfolio brands returned to growth in June. With that first summary, I will hand over to Adam.

Adam Karlsson: Thank you, Daniel, and good morning everyone. We have made progress in strengthening our profitability. We have more to do when it comes to sales. Online sales 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, and we're upgrading our existing store base — we see sales uplift in the stores we have touched so far, though this work is still in its earliest stage. In the second half we will broaden the rollout to 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. We're happy to see improving performance in both Southern Europe and in Asia. The initiatives to consolidate our supplier base and deepen strategic partnerships 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 gross margin remained somewhat positive and costs for markdown were in line with previous years. On a rolling 12-month basis, we are now at a gross margin of 54.1%, which means we're also in the range of what we have called a more normalized gross margin of 54%–55%. This is an important building block to reach our long-term ambition of 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 SEK 679 million, 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 more efficient use of marketing resources. This drove a significant improvement in operating profit — excluding the one-offs, the margin for Q2 was 12% compared to 10.4% in Q2 2025. On a rolling 12-month basis including one-offs, the operating margin increased to 8.5%, up from 6.5%. Inventory — stock in trade is now at 15.8% of sales versus 16.6% in the same period last year. The inventory composition is considered good going into Q3 while we continue to improve precision in demand planning, buying, and stock management. Looking at the structural journey over the last years, we have strengthened both our profitability and our operational foundation — demonstrated in gross margin, inventory levels, and operating margin. Key value drivers such as return on capital employed and earnings per share are building clear momentum. Over the past three years, the rolling 12-month return on capital employed has increased by over 11 percentage points to 17.4%, and EPS has increased more than 260% over the same period. Leverage remains inside the net debt to EBITDA target of one to two times. Cash conversion is strong, helped by good progress in active working capital management. We have a high degree of financial flexibility and liquidity buffer to navigate volatility and capture future opportunities. In the second quarter, we completed a share buyback program of 1.4 million shares worth around SEK 220 million. We continue to return capital to shareholders through dividends, with the first installment paid in May and the remaining part to be paid in November. With that, I'll hand back to Daniel.

Daniel Ervér: Thank you. During the quarter, we strengthened and built a more solid foundation for the H&M Group. As mentioned, we strengthened our organizational setup by removing the previous regional layer in our sales markets and also removing the online sales organization. The purpose is to move decision-making much closer to the customer, to become more relevant in each market and pick up speed in how we improve the customer offer. This change also strengthens the representation of sales markets in the global leadership team. For the second half of the year, we are starting an upgrade of our digital infrastructure. This is an important step toward becoming more data-driven and taking better decisions in how we build our customer offering and experiences. It also helps us improve the precision in how we match supply to demand we see in the markets. Online continues to develop really well. To further leverage the strength of having a seamless customer journey across channels, we still have more work to do on our physical store network of 4,000 stores across 81 markets. Regarding flagships, the latest example is the opening of Hamngatan in Stockholm in April. We also continued expansion into growth markets, with a very successful first store opening in Rio de Janeiro in April. We have started to improve a larger part of our portfolio through improvements to layout, product presentation, and better tech tools for staff — work that will reach a broader part of the portfolio in the second half of this year. During the quarter, we continued to build excitement around our brands by tapping into cultural moments and partnering with exciting creators. The collaboration with Stella McCartney was really well-received by our customers at large, especially our young customer base. It combines outstanding products with exciting sustainable innovations, and we were happy to see Taylor Swift wearing one of the key pieces at an NBA game. Another very different but important collaboration was with the Swedish candy brand Bubs in beauty, which was also exceptionally well-received by our young customer base. Lastly, we were proud to see Anitta performing at the World Cup opening in L.A. in a custom-made H&M outfit just a few weeks ago.

Adam Karlsson: Let's look ahead. The financial outlook for the year remains. For the third quarter, we estimate the overall effects of external factors impacting gross margin to be neutral compared to the same period last year, with a continued tailwind from transactional currency effects given the weakened dollar, but with the cost for tariffs still being the main headwind. Sequentially, we expect higher cost for freight, mainly related to elevated spot prices for air freight and fuel surcharges. We are now within the normalized gross margin range of 54%–55% and will continue to invest in the right quality in the right season, buying at competitive pricing to ensure a fantastic offer combined with strong cost control. On markdowns, we expect the cost of price reductions as a share of sales to be on similar levels as Q3 last year. On SG&A, as previously communicated, we have the ambition to grow SG&A at a low single-digit level in local currencies for the full year. The implementation of new tech infrastructure will result in somewhat increased cost pressure throughout the second half. The one-offs taken in the quarter are related to driving higher sales through stronger execution but will also result in cost savings included in the full-year SG&A guidance. Back to you, Daniel.

Daniel Ervér: Thank you. Our priorities remain clear. We are proud of the improvements in profitability and stock levels — that gives us a strong foundation to continue to accelerate and build a stronger H&M. We have simplified and strengthened the organization, invested in flexibility and speed in our supply chain, and are embarking on upgrading our digital infrastructure. That puts us in a position to accelerate execution and do what truly matters most for our customers — exceptional products with outstanding value for money, inviting and exciting experiences, and continuing to build strong brands. We are confident in our ability to continue to drive profitable, sustainable growth over time. Thank you. I'll hand over to Joseph to move into the Q&A.

Joseph Ahlberg: Thank you, Daniel. We will now start our Q&A. We will begin with questions from participants in this room and then open up to telephone participants.

Andreas Lundberg: Good morning. Andreas Lundberg with SEB. On your operating model changes and the somewhat low inventory in certain places — how does that work together, and where are you in offensive moves? When can you push the trigger for better availability given demand?

Daniel Ervér: Over the last quarters, we have made significant steps in reducing stock in relation to sales. We've now come to a point where we put high pressure on our allocation systems and on the precision of our systems to make sure we don't create supply gaps to the demand. That's why we're talking about further strengthening the digital infrastructure and further consolidating the logistic network to create the preconditions to continue the journey towards our 12%–14% target for stock in relation to sales. At this point, we need more structural changes to make sure we don't create the supply gaps we've seen in this quarter.

Andreas Lundberg: Can you push harder now, or do you still have things to do before you can?

Daniel Ervér: We're happy with the progress on stock in relation to sales. We don't see that will take major steps. We will continue to work on reducing stock in relation to sales, but not at the same pace — to continue that journey, the pace will be slower because we will need to do further moves in supply chain and tech infrastructure to do it without creating supply gaps.

Andreas Lundberg: On the gross margin range of 54%–55% — you've reached that now. How comfortable are you that you can stay at this level given the focus shifts toward the customer in various ways?

Adam Karlsson: The ambition is clear. We see a situation right now with cotton prices having spiked in the last couple of months, now coming down again. Given that uncertainty, we are committed to staying in the range and continuing to reinvest further supply chain improvements and operational efficiency gains to maintain in that range while investing toward the customer. If you take the external factor uncertainty aside, we feel comfortable that we are now close to the range where we can operate more long term. It will call for continued work in the supply chain and moving the sourcing excellence program further down the tiers. Committed to the target, but uncertainty around macro factors right now.

Niklas Ekman: Niklas from DNB Carnegie. On the one-off costs — you talk about SEK 679 million in restructuring costs, but also SEK 565 million in changes for management in portfolio brands, tech, and logistics. Is that also a one-off cost, and why is it not mentioned separately?

Adam Karlsson: We try to be clear distinguishing what are, as Daniel said, rebuilding the operating model while removing layers — that's a big thing we don't foresee happening again. The other part involves more normal changes that are more frequently recurring. That's why we distinguish between the two. The nature of them summing up quite a lot of small parts became quite big. We also needed to do a provision for effects that will come later. In nature they are somewhat different given that the regional layer removal is a more long-term change we won't expect to happen again.

Niklas Ekman: On the OpEx guidance for the full year — OpEx was down in Q1 and adjusting for one-offs, even more so in Q2. Yet you're guiding for increased OpEx for the full year. Are we looking at underlying OpEx increase exceeding the 2% or so decrease in the first half?

Adam Karlsson: We are committed to managing our operations very effectively. We also call out that we will start to do investments, particularly in the tech landscape, that will be tilted toward the second half of the year. It is our best estimate of the sum of those effects. Part of that will be hitting the result rather than just being put on the balance sheet. There's no change of ambition, it's just the mechanics of how the year will look.

Niklas Ekman: On gross margin external factors — are you seeing an increase from Q4 onwards?

Adam Karlsson: The currency effect will likely taper off. We won't have the same big movements from a weakening U.S. dollar. Cotton prices spiked but we don't see major reasons for cotton supply having gone down fundamentally — it was more a market sentiment effect. Over the last couple of weeks it's been coming down, and that's hopefully a positive aspect. There is some upward pressure ahead of 2027, but we hope the material price spike will not be significant.

Daniel Schmidt: Good morning, Daniel Schmidt from Danske Bank. On the lack of inventory affecting sales — this has been mentioned for a couple of quarters. Wasn't proximity sourcing supposed to compensate for that?

Daniel Ervér: Absolutely, and it is helping us close gaps and react quicker when demand exceeds supply. We wouldn't have been able to be at this level of stock efficiency and sales if we didn't have proximity sourcing in place. At the same time, we have set high ambitions for creating better stock efficiency to always have the latest, most current fashion. There's still work to do. We continue to put a lot of effort into accelerating the share we source with much shorter lead times to further enable us to continue toward the 12%–14% range.

Daniel Schmidt: What's the development recently in womenswear momentum?

Daniel Ervér: When looking at sales across the board, we are not satisfied. We had plans for stronger sales in this quarter than what we could see. We see different performance between customer groups, but none is strong enough to compensate and drive total sales to where we want to be, including womenswear. We are happy with the way we work with more flexibility and better trend detection, but womenswear was also affected by some of the supply gaps. It's an issue we see across the board. Additionally, womenswear is an important customer group for us in Western Europe, where we have the effects of very weak consumer sentiment. We see the U.K. being a difficult market this quarter. We see weak consumer sentiment in Germany, even though we believe we're gaining market share there. The supply issues related to the logistics network for Western Europe also affected womenswear.

Fredrik Ivarsson: Fredrik Ivarsson, ABG Sundal Collier. On the store optimization program — you guided for the full year to be slightly positive. Is that still the relevant guidance?

Adam Karlsson: Yes.

Fredrik Ivarsson: Is the OpEx guidance including or excluding the one-off costs?

Adam Karlsson: Including the one-off costs.

Arvid Uddfeldt: Arvid Uddfeldt, TT Nyhetsbyrån. Recently you gave notice to 100 people in Stockholm. Why, and could there be more layoffs?

Daniel Ervér: That notice was related to the organizational change that we are today making provisions for as one-off costs. It involves removing several layers in our organization in order to move the mandate closer to the customer and make decisions closer to the customer. It is a one-off event and we report the provision as a one-off cost. This is not affecting our store colleagues. This is colleagues working in our offices in our sales organization. We are creating a flatter organization with more decision mandate to our local sales organizations to speed up the pace of execution of our offerings.

Monique Pollard: Hello, morning everyone. First question on the store upgrade work — can you give some sense of the extent of the uplift you're seeing in store sales densities for the stores you've touched so far, and what proportion of your store estate you expect to touch in the second half and into 2027?

Adam Karlsson: We both open new stores and close others to get a shift from locations that have served their purpose. We also rebuild stores, which is tedious and costly. But what we're speaking about here is a more agile and fast-moving improvement program where we touch layouts, digitalization, and RFID technology in our stores to ensure availability and productivity.

Joseph Ahlberg: Over the last year or so, we've probably touched around 15%–20% of our store estate with positive momentum in both availability and store setup that better supports catering to demand from the local catchment. We've also adjusted sizing of concepts during this process. The outcome is not equal in all stores, but that's the general foundation we're now trying to scale further throughout the autumn.

Daniel Ervér: We see especially good results when we're able to extend the assortment offering — when we're adding H&M Move sportswear or beauty through perfumes as a destination, those changes have the most positive effect on performance.

Monique Pollard: Second question on the restructuring — can you give some sense of the SEK benefit you'll see to the P&L from these actions, and when should we start to see that benefit?

Daniel Ervér: The main reason for doing the change is to speed up decision making and create more relevance for our customers across our 81 different markets, where customers have different needs based on calendar, weather, and cultural aspects. The closer we put decision making to the reality of our customers, the more relevant we will become. Over time, that should result in a more relevant customer offer driving profitable sales growth. There is also a cost effect to it.

Adam Karlsson: Historically when we've done these things, we did in a previous year a cost and efficiency program that cost around SEK 800 million and we expected savings around SEK 2 billion, with about half of those savings related to organization and staffing. I think that's a fairly good proxy for how we expect costs to come down related to the provision we make here. Implementation will be gradual — some markets can do this quicker for legal reasons, some will take more time, starting now and ending up early next year. That's when we can start to see the benefits.

William Woods: You've done great work on the supply chain over the last four quarters. What's the next one big strategic priority over the next 6–12 months?

Daniel Ervér: Two things above all others. First, using the strength of the flexibility and speed in the supply chain, combined with the tech investments and the investments we've made in stronger, more creative organization, to create outstanding products that we deliver at the right time with no supply gaps. Second, we have a huge strength in having a store portfolio network of 4,000 stores, but we recognize there's more work that needs to be done on the store portfolio to show up in a way that truly inspires and excites the customer and makes them convert and come back. Those are the two key strategic priorities combined with everything else we've mentioned.

Warwick Okines: Good morning. First question — how many stores do you plan to touch in the second half of the year?

Adam Karlsson: We believe that by the end of this year, we will have touched around a quarter of the stores. That's the ambition we've set, representing an increased pace compared to the normal rebuild cycle. That is a more effective way, and hopefully it will continue to generate the benefits we have started to see, even though it's early stages, in both availability and improved customer experience.

Warwick Okines: On product — can you provide more color across categories where you're happy and less happy with the development across women's, men's, and kids?

Daniel Ervér: Product remains the most important focus. It's the reason why customers come to us, why they come back, why they speak positively about us. We are investing in stronger data models, better insights, applying AI for trend detection and design enhancement. We're also investing in the best creative talents to be the curators and developers of the assortment. Both go hand in hand. When we act with more flexibility and take later decisions, we take better decisions and deliver more relevant assortment. The reason we talk a lot about supply this quarter is because we call it out as one of the reasons why we did not reach the ambition for sales that we set for ourselves. Product remains the most important piece of the work that we do.

Anne Critchlow: Good morning. First, when will the spike in materials prices affect gross margin — Q4 or H1 next year? Second, can you comment on the outlook for marketing costs in the second half?

Adam Karlsson: We normally estimate a 6–8 month lag between fiber and raw material prices and our gross margin. We don't foresee much impact during the autumn — it's more something we keep under close scrutiny ahead of the spring. On marketing, we believe we will remain on fairly similar levels. We'll take with us the learnings we've had on how we increase the productivity of marketing resources — how we use different channels, optimize content per channel, and distribute efforts between markets. We strive for that balance to disconnect the level of resource needed from the effect achieved.

James Grzinic: On availability issues in May and June and the impact on top line — can you clarify what a clean number would have been for both the flat Q2 and flat June?

Joseph Ahlberg: We do not provide a clean number for this, but what we try to do is highlight the key reasons why we saw an outcome slightly below what we planned for. To confirm — both fiscal Q2 and current trading would have been better adjusted for both availability issues and calendar swings. The logistics disturbances impacted us in both May and during the start of June. The pattern with Western Europe markets seeing quite subdued demand was also present in both Q2 and so far in June.

Matthew Clements: A couple of questions on market share trends. Southern Europe demand has been robust across the industry — are you winning share there? How has U.S. demand evolved into Q2? In Western Europe, are there markets where you're gaining share even if the market is stepping backwards?

Daniel Ervér: Looking at the external data, Southern Europe has shown resilience over the last couple of months while Central and Western Europe have not. In Germany, despite weak consumer spending power, we have been able to take market share. In Southern Europe and especially markets closest to the Mediterranean, it's more evenly on par — we see a more resilient customer and have performed well. On the U.S., we see sequential strengthening — it was not strong in Q2, but it's a step in the right direction, attributed both to our offering and to the supply of garments that we set up prudently through the end of last year and into this year. The trend is in the right direction, but the level is not fully where we want it to be.

Matthew Clements: Given the improvements in business efficiency, are there areas where you could materially accelerate investment?

Daniel Ervér: Several areas. First, the customer offer — we always look at where we need to invest to become more competitive and strengthen quality to show up with an unbeatable value for money. Second, investment in digital infrastructure — that's something we will lean heavily into for the second half with the upgrade. Third, our physical store portfolio — the more strong cases we find of really elevating the experience that resonates with customers, the more we will lean into it, both through full rebuilds like we've done with our flagship portfolio and through the more cost-efficient, less capital-intense agile optimizations.

Adam Karlsson: When it comes to the tech investments, not all come as CapEx — some of these infrastructure improvements are also on the OpEx line.

Adam Cochrane: Good morning. On markdowns — previously you talked about increasing promotional intensity to get customers to shop. Is that still the situation, or are you managing markdowns more tightly?

Daniel Ervér: The situation is fairly similar to how we described it in recent months. Improved stock efficiency helps us spend less on stock cleaning given better sell-through before stock cleaning. The markdowns we do use are more toward triggering the more price-sensitive segment of the market. Given lower consumer confidence in some of our key markets, in certain parts of the customer base we have needed to activate with more intense markdowns for the most price-sensitive segments. We see in many external reports that certain customer groups are increasing and staying very resilient, while certain customer groups have a really tight wallet after several years of inflation. There's not a major change.

Adam Cochrane: Is there a lag between you moving toward higher full-price sell-through and customers responding to it?

Daniel Ervér: When we get everything together — an exciting experience package, strong communication, and most importantly really on-trend relevant garments — there is very high appetite for full-price sell-through from the customer base. We also recognize that across 4,000 stores and all different demographics, some customers have seen a lot of pressure on their disposable income through inflation, and sometimes it's a question of whether you have EUR 10 or EUR 15 to spend. When we get everything together as we do in some of the flagship stores we've upgraded and as we see in our online channel, we see very strong sell-through on full price.

Adam Cochrane: Is there an opportunity to focus more on customers with higher disposable income, adjusting product mix to increase average selling prices?

Daniel Ervér: Over the last two years, it's been really positive to see that we are able to sell a wider mix and wider range of products at higher price points — high-functional athletic tights, the spring outdoor collection, performance in denim. We welcome everyone, and it's important that you can always find very attractive, sustainable, but relevant products at an attractive entry price point. We have potential and work ahead of us to strengthen both categories and widen our offer to build an even more relevant H&M.

Richard Chamberlain: On tech investment — how much was the effect on OpEx from tech investments in Q2, and what's the expectation for the second half?

Adam Karlsson: The program to start upgrading our core ERP systems and fundamental tech infrastructure has started, but it has not yet started to affect the OpEx level. That is ahead of us. That is why we remain with our guidance of low single-digit OpEx cost increases in local currencies. The delta versus today is to a great extent attributed to the OpEx part of the tech investments we're starting to do.

Richard Chamberlain: On pricing and price competitiveness in Western Europe and the U.S. — do you need to reinvest in price to drive sales volumes?

Daniel Ervér: It's tremendously important that the customer can feel confident that you always find the best, most outstanding value for money when you come to H&M, regardless of price point. We are always doing work to make sure we are both offering outstanding value for money and that we are competitive. More than that, it's about how we build up the assortment structure and make sure we have good coverage on the most relevant and attractive price points, with each product providing outstanding value for money at that price point.

Erik Sandstedt: Erik Sandstedt from Kepler Cheuvreux. Have you seen any impact from the ongoing heat wave in Europe on June sales?

Daniel Ervér: Looking at monthly sales in fashion retail is always very tricky because it's affected by short-term effects, with weather probably being the strongest one. Over time, weather is neutral. In the short term, it has a very big impact. From what we can see, the last two weeks have seen strong interest in the most summerish collection. H&M is a great destination for summer garments and we can see that we are relevant for the customer when there is a heat wave. But I would be very cautious to make any bigger conclusions. We assess the month to be much in line with the sales performance we've seen so far this year.

Erik Sandstedt: Inventory levels continue to decline year-over-year, but we're not seeing a positive impact on markdowns — flat in Q2 and flat guidance for Q3. Is there no strong correlation between inventory levels and markdowns?

Adam Karlsson: There is, but if we unpack into two components — the stock-clearing component goes down quite a bit. What Daniel describes and what we can see is that commercial activity we've needed to keep on a similar level, and that's the counter-aspect right now. In the long term, once hopefully we're through this more subdued consumer confidence, we believe we will more fully reap the rewards of the more effective inventory, getting the benefits of normalizing the commercial aspects of markdowns and remaining on the lowered stock-clearing component.

Joseph Ahlberg: Any further questions from the room? No. Over to you, Daniel.

Daniel Ervér: That concludes this first half year press conference. Thank you so much for joining. Thank you for your continued engagement and interest in H&M. We truly appreciate that. If we don't speak before, we will meet next time on 24th of September for the Q3 report. With that, I wish you all a wonderful summer. Thank you.