H&M Rewards Shareholders with Higher Dividend and Buybacks Amid Profitability Push
In a move underscoring its commitment to shareholder returns, H&M Group (OM:HM B) has proposed an increased ordinary dividend for 2026 and finalized a significant share repurchase program. The decisions arrive as the Swedish fashion retailer navigates a fiercely competitive landscape, prioritizing margin improvement and operational efficiency over pure sales growth.
The company plans to pay an ordinary dividend of SEK 7.10 per share for the 2026 financial year, up from previous levels. This comes alongside the completion of a buyback of approximately 6.7 million shares, worth around SEK 1.15 billion. These actions highlight management's focus on capital return, even against a backdrop of projected near-term sales softness. The group has guided for a 2% sales decline for the December 2025 to January 2026 period, following full-year 2025 sales of SEK 228.3 billion and net income of SEK 12.2 billion.
"This is a clear signal from the board that they believe the profitability work is bearing fruit," said David Chen, a portfolio manager at Nordic Capital Insights. "Returning cash while navigating a tough market shows confidence in their operational cash flow generation, even if top-line growth is challenged."
The stock, which closed at SEK 175.9, presents a mixed near-term picture with a 5% year-to-date decline but strong longer-term gains of 23.7% and 45.7% over one and three years, respectively. Analysts suggest the capital return news shifts investor focus squarely onto how H&M balances rewarding shareholders with funding its strategic pivot against competitors like Inditex's Zara and the online giant Shein.
"It feels like a distraction," countered Maya Rodriguez, an independent retail analyst known for her critical stance. "They're buying back shares while guiding for sales declines? This looks like financial engineering to placate investors, not a sign of fundamental health. The real battle for market relevance against Shein is being lost."
In contrast, Lars Johansson, a long-term retail shareholder, expressed approval. "I've held through the rough patches of their turnaround. The higher dividend and buyback are tangible rewards for that patience. It shows discipline—they're improving profits and returning the excess, not chasing unprofitable growth."
The company's recent annual results, featuring slightly lower sales but higher net income, reinforce its narrative of cost control and margin enhancement as primary value drivers. The key question for observers is whether H&M can sustain its profit growth trajectory amid seasonal volatility and intense competitive pressure.
This analysis is based on publicly available financial data and announcements. It is for informational purposes only and does not constitute financial advice.