If H&M is sneezing, does the rest of mid-market fashion have a summer cold?

In the half to May 31, H&M operating profits slumped to SEK7.12bn (£546m), compared to SEK9.18bn (£705m) the previous year. While net sales in local currencies increased by 1%, and when converted came to SEK112bn versus SEK113bn.

Speaking to analysts this morning, H&M chief executive Daniel Ervér blamed rising costs for the fashion giant globally, alongside the need to mark down products, as the reasons for the brand’s struggles.

He said: “In the US, we are starting to see some competitors increasing prices. Different competitors are acting in different ways. Some more aggressively and some more cautiously.” 

He also pointed to the “fast-moving situation” on tariffs in the US, with the Trump administration seemingly changing its mind on the subject every 90 days.

While the fashion giant operates in over 100 different international markets, so did not go into a huge level of granular detail about the UK market and consumer behaviours, Ervér said the customer globally was still very price conscious.

“The customer is very price sensitive,” he said. But H&M’s wide range of sourcing locations meant it had “good flexibility” to be “very, very competitive” on the three areas he thought consumers consider most important for fashion brands: price, fashionability and sustainability.

Still, there can be no doubt that there is, in the words of senior apparel analyst at GlobalData Louise Déglise-Favre, “an overall reluctance from shoppers to spend amid the tense geopolitical climate”.

The UK is certainly seeing this reluctance to spend, despite the blazing hot start to summer, which usually leads to an uptick in spending – particularly in more discretionary categories, like fashion.

The most recent retail sales figures from the Office for National Statistics for May showed a 1.4% drop in non-food stores sales in May, while clothing sales dipped 1.8% for the period.

The other monthly sales indicator, the BRC-KPMG retail sales monitor, had non-food sales dropping 1.1% for the same period, with in-store non-food sales dipping 0.9%.

BRC chief executive Helen Dickinson noted: “Consumers put the brakes on spending, with the slowest growth in 2025 so far. This was due largely to declines in non-food sales, as fashion and full price big-ticket items were held back by lower consumer confidence.”

Added burdens

While international giants like H&M can afford to weather a few bad quarters and still invest in product and store fit-outs to remain relevant, the same cannot be said for many smaller brands operating in that same space.

On top of a reticent consumer and flat consumer confidence, UK retail is also dealing with soaring tax and added costs from changes to national insurance, which came into effect in April.

The added £5bn in annual costs has hit all retailers – none more so than already struggling mid-market fashion brands.

Recent retail headlines have been dominated by River Island’s proposed restructuring plans. If approved by creditors, the ailing brand would shut 33 of its 250-strong store estate and look for rent holidays or cuts on an additional 71 of its stores – putting hundreds of jobs at risk.

River Island chief executive Ben Lewis blamed the toxic cocktail of increasing online and value competition, combined with soaring property and staffing costs, as the reason River Island is struggling.

“The well-documented migration of shoppers from the high street to online has left the business with a large portfolio of stores that is no longer aligned to our customers’ needs,” Lewis said.

“The sharp rise in the cost of doing business over the last few years has only added to the financial burden.”

It’s the same story across many other high street fashion staples, even ones that had weathered every storm of the last five years and seemingly come through unscathed, like Primark.

The fashion giant announced it intends to axe 150 jobs, mainly at its Dublin head office but also others in the UK and the US, to save on rising costs.

While Primark has been bucking the trend and growing abroad, it has found trading conditions tougher in its core UK and Irish markets. A familiar tale, across the fashion landscape.

“A lot of mid-market fashion brands have been struggling for a long time,” said one analyst. “River Island is a good example. Who is the brand for? Who are its key target demographics?

“The product is tired; it’s got tens of heritage stores in places where no one shops anymore and even the good ones aren’t particularly enjoyable places to shop in. It’s also not a cool brand, but nor is it a much-loved institution for a slightly older demographic.

“It’s over-stretched with its store estate and is now desperately trying to right-size to avoid driving off a fiscal cliff edge. It’s the same story you could tell of dozens of other former high street fashion staples”.

Silver linings 

For all the doom and gloom, there are some bright spots for mid-market fashion at home and abroad.

Earlier this month, Zara-owner Inditex reported an increase in profits driven by sales of its “well received” spring and summer collections and its ongoing investment in new stores.

Other perennial powerhouses include the likes of Next, which seems to relentlessly exceed sales and profit targets every quarter.

Even in the face of horrible adversity, some retail fashion brands have endured. Marks & Spencer has just come out the other side of a nearly two-month ordeal following a cyber attack that saw its ecommerce website closed and availability in stores greatly affected.

While M&S fashion sales were badly affected – down to 1% growth in the month to May 25, compared to 11.5% growth the previous month – the brand was saved from the threat of fiscal annihilation by customers shopping in stores.

Stores performed well “across all fashion categories and particularly womenswear”, M&S said. “This underlines the strength of our product offer – where quality and value perceptions remain market-leading and style perceptions continuing to increase – and loyalty of our customers.”

The lesson from all of this seems to be then that, if you are a mid-market fashion brand, all you need to survive the current storm is to have a beloved and well-known brand, quality product stocked at a competitive price point and a truly omnichannel model comprising experiential flagship stores in good locations and home delivery and click-and-collect services.

Easier said than done.