H&M: efforts to attract fashion-conscious customers take 18–24 months to deliver meaningful revenue impact; US tariffs more impactful than for Zara due to heavy reliance on China and Bangladesh; store optimisation helps improve efficiency. JD Sports: Tariffs Could Push Brands to Tighten Wholesale Pricing; US Competition Intensifies; Dick’s and Foot Locker Merger May Reduce Discounting Volatility.

In the fast fashion space, Yanmei Tang, Analyst at Third Bridge made a series of remarks regarding H&M, informed by the insights from industry experts:

H&M is projected to deliver a modest 2-3% sales increase over the next 12 months, supported by selective pricing actions and potential volume stabilisation. However, this outlook remains vulnerable to FX volatility, weak consumer sentiment, and the uncertainty surrounding US tariffs.

A central challenge for H&M is its struggle to win back the fashion conscious customers it lost in recent years. According to Third Bridge experts, the company is spending more than expected on marketing to attract younger and trend sensitive shoppers, but results have yet to materialise. Its repositioning strategy focused on younger women through womenswear, sportswear (Move), and beauty has started to gain traction, but our experts broadly agree it will take at least 18 to 24 months before the brand sees meaningful revenue impact.

On sourcing, Third Bridge experts highlight H&M’s heavy reliance on China and Bangladesh, leaving it more exposed than Zara (Inditex) to geopolitical and cost pressures. While nearshoring efforts are underway, structural limitations in Europe and insufficient capacity in alternatives like Morocco and Turkey make meaningful diversification unlikely. As a result, H&M is expected to keep its entry level price points competitive against rivals such as Shein and Temu, while selectively raising prices in mid tier and premium categories where demand is less elastic.

Regarding JD Sports, Yanmei Tang, Analyst at Third Bridge, says: Our experts say Dick’s Sporting Goods’ acquisition of Foot Locker is broadly positive for JD Sports. By removing a distressed competitor from the market, JD can expect a more rational pricing environment. Both Dick’s and JD run a full-price model, so the deal could help reduce the volatility of discounting that has weighed on margins in recent years.

Our experts warn that brands such as Nike and Adidas could look to offset tariff-related pressures by tightening wholesale pricing terms. Since most branded products are sourced from Southeast Asia and exposed to US tariffs, there is a possibility that suppliers push through higher costs. With Dick’s and Foot Locker combining forces, JD’s relative leverage in negotiations may weaken, leaving it vulnerable to margin compression.

Competition also intensifies at the ground level. JD’s footprint in the West Coast and Southwest overlaps directly with Dick’s and Foot Locker, meaning local battles in performance footwear and athletic leisurewear will likely sharpen. Our experts highlight that both retailers are expanding into private labels and exclusive offerings, adding another layer of head-to-head rivalry.

At the same time, JD’s multi-banner strategy creates its own complexity. Running banners such as JD, Finish Line, Shoe Palace, DTLR and Hibbett adds cost duplication and integration challenges. Yet our experts see diversification as a strength, providing multiple levers for growth and resilience across different customer segments and geographies.

Store optimisation is another key lever. H&M’s 2025 plan to close 200 stores while opening just 80 is intended to improve efficiency. Our experts see this as a net positive for savings, but caution that omnichannel risks remain unless online conversion and seamless integration with physical stores improve. Closures in certain cities could undermine H&M’s relevance in local markets.