H&M, the Swedish fast-fashion retailer, reported weaker-than-expected sales for the first quarter of 2025, marking a slow start to the year. The company's sales rose by just 2% year-over-year to 55.33 billion Swedish krona ($5.5 billion), falling short of the 55.86 billion Swedish krona forecast by analysts. Operating profit was also below expectations at 1.2 billion Swedish krona, compared to the anticipated 1.9 billion Swedish krona. H&M's profit increased by 53% despite the challenges. The company attributed the disappointing results to a combination of factors including higher discounts and costs, as well as a cautious consumer environment. H&M's CEO, Daniel Erver, noted that the negative effects are expected to lessen in the second quarter. The retailer also reported a 1% increase in sales for March, indicating a slight improvement but still reflecting a sluggish start to the spring and summer season. The company is dealing with inventory levels at 17.4% of sales, influenced by timing effects of Black Friday and disruptions in the Red Sea, which forced earlier shipments. Analysts have expressed concerns over H&M's ability to recover, with some suggesting that the company's efforts to increase sales without damaging gross margins will be crucial moving forward. H&M aims to achieve a 10% EBIT margin for the year, but faces risks from potential US tariffs, given that the US accounts for 15% of its revenue and China for 25% of its purchases. The company is also focusing on improving product quality and feels well-prepared for the upcoming Easter and summer seasons. The broader European textile industry has also shown signs of a slow start to 2025, with other major players like Inditex reporting a 4% sales growth between February and early March.