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Corporate Score 68 Bearish

H&M Shares Drop 7% After Profit Warning on Rising Markdowns

Mar 26, 2026 11:53 UTC
H&M.AX, US10Y, XLY
Short term

H&M's stock declined by as much as 7% following a warning that increased discounting will erode profits in the current quarter, signaling growing pressure in the apparel retail sector.

  • H&M shares fell as much as 7% on Thursday
  • The company warned of increased markdowns in the current quarter
  • Profitability is expected to be negatively impacted by higher discounting
  • The decline reflects broader challenges in the consumer discretionary sector
  • H&M.AX and XLY are among the affected financial instruments
  • No specific revenue or margin figures were disclosed in the warning

H&M shares experienced a sharp decline of up to 7% on Thursday after the Swedish retailer disclosed it anticipates higher markdowns in the current quarter, which will weigh on profitability. The warning reflects mounting challenges in the consumer discretionary space, particularly within retail, as companies grapple with shifting demand and inventory management. While the company did not provide specific financial figures beyond the expected impact of markdowns, the market reaction underscores investor concern over margin sustainability. The drop in H&M.AX coincided with broader sector trends, with the XLY ETF reflecting broader sentiment in consumer discretionary stocks. Concerns over discounting intensity also weighed on investor confidence in retail performance, especially amid uncertain consumer spending patterns. The move highlights the risks retailers face when adjusting pricing strategies to clear inventory.

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