H&M June-August profits dives as Russia exit stings
Stock Markets 6 minutes ago (Sep 29, 2022 02:25AM ET)
© Reuters. FILE PHOTO: H&M logo is seen on a shop in Riga, Latvia January 30, 2020. REUTERS/Ints Kalnins
STOCKHOLM (Reuters) -H&M, the world’s second-biggest fashion retailer, reported on Thursday a much smaller-than-expected June-August pretax profit amid cost inflation, slowing consumer spending and one-off expenses related to its exit from Russia.
Pretax profit in the period, the Swedish group’s fiscal third quarter, fell to 689 million crowns ($60.9 million) from a year-earlier 6.09 billion. Five analysts polled by Refinitiv on average forecast a 2.98 billion crowns profit.
A one-time cost of 2.1 billion crowns related to the winding down of H&M’s Russian operations impacted the result, accounting for half of the decrease in profits, the company said in a statement.
H&M announced in July it was winding down its business in Russia as a result of the country’s invasion of Ukraine.
In Europe, where H&M has the bulk of business, a worsening security situation, record energy prices and high inflation are weighing on consumer confidence, and households are cutting back on shopping as they brace for tougher times.
H&M announced a cost cutting programme that it predicted would result in annual savings of around 2 billion crowns, with savings expected to become visible in the second half of 2023.
It said autumn collections had been well received, with sales up 7% year-on-year in local currencies in the period Sept. 1–27.
($1 = 11.3104 Swedish crowns)