UBS Sees Limited Visibility on H&M Sales Inflection Through FY26; Neutral Rating Kept

05:28 AM EDT, 08/19/2026 (MT Newswires) -- UBS Global Research said Tuesday it sees limited visibility on a broader sales inflection for H&M Hennes & Mauritz (HM-B.ST) through fiscal 2026, even as the Swedish fast fashion retailer is expected to sustain its operational execution in the fiscal third quarter. "HMB continues to execute well on key initiatives, with improvements across: 1) internal gross margin drivers including markdown control; 2) strong [operating expense] control including latest measures announced in Q2 (here); 3) better inventory control with inventory at 15.8% of Sales at Q2, lowest in 10yrs (Q2 FY16: 13.7%) even if it is well behind [Inditex (ITX.MC)] at 9.4% (Q1FY27). Indeed, we believe that Q3 (24th Sep) is likely to yet again show HMB's strong control on these variables," the research firm wrote. "Q3 weather and easier comps in Jul/Aug likely helped sales trends in most markets, with some early signs of new space contribution starting to emerge, though we continue to see weak trends in Germany. A clear sales inflection still appears to be beyond FY26, in our view, limiting visibility on the [mid-single-digit] sales growth profile required to reach the 10% EBIT margin target," analysts added. Against this backdrop, UBS reiterated its neutral rating and price target of 168 kronor on the stock, while its earnings forecasts are "broadly unchanged." For 2026, the research firm still expects sales of 221 billion kronor and group clean EBIT of 20.2 billion kronor for H&M.