H & M Hennes & Mauritz AB (publ)

What does it do?

H&M is one of the world's biggest fashion retailers, selling affordable clothes, shoes, accessories, and home goods to shoppers in over 70 countries. You've likely walked past one on a high street — they sell everything from a £10 t-shirt to a full living room setup through H&M Home. Beyond the main H&M brand, they also run COS (think minimalist, slightly pricier fashion) and a few other brands. Essentially, they're in the business of making fashion accessible to everyday people at low prices.

How does it make money?

H&M makes almost all of its money by designing clothes and selling them directly to consumers through its physical stores and online shop — it doesn't manufacture anything itself, it outsources production to factories mostly in Asia. Annual revenue came in at around $228 billion Swedish kronor (roughly $21–22 billion USD), though this was a step down from the prior year's $234 billion, signalling some top-line pressure. The company sells across multiple brands — H&M, COS, & Other Stories, Monki, and Weekday — each targeting slightly different customers and price points. Margins are squeezed by the cost of goods, store rents, and logistics, so keeping those input costs low is critical to profitability.

Why do investors care?

The bull argument for H&M is a turnaround story — after years of losing ground to Zara and Shein, management has been cutting costs, closing underperforming stores, and investing in its online presence to stabilise the business. If consumer spending recovers in Europe (its biggest market) and H&M executes on its efficiency drive, profit margins could improve meaningfully from here. The stock trades at a relatively low valuation compared to its history, meaning investors don't need a miracle — just steady improvement — to do well. The key question is whether H&M can modernise fast enough without gutting the brand identity that made it popular in the first place.