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H&M has announced pre-tax profits of SEK 689m (£56.5m), down from SEK 6.09bn (£220m) a year prior, in the group’s fiscal third quarter from 1 December 2021 to 31 August 2022.
It said its results were impacted by a one-time cost of SEK 2.1bn (£76.1m), related to the winding down of H&M’s Russian operations, accounting for half of the decrease in profits.
H&M announced in July it was winding down its business in Russia as a result of the country’s invasion of Ukraine.
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 September 1–27.
Helena Helmersson, CEO, said: “The third quarter has largely been impacted by our decision to pause sales and then wind down the business in Russia. This has had a significant effect on our sales and profitability, which explains half of the decrease in profits compared with the third quarter last year.
“Many other external challenges also made their mark on the quarter. In common with the rest of the industry, sales were weak in many of our major markets at the start of the period. Sales then gradually improved, despite a heatwave in several European countries and some remaining delays in the supply of goods.”
She added: “Increased raw materials and freight prices as well as a stronger US dollar resulted in substantial cost increases for purchases of goods. We have chosen not to fully compensate for the increased costs, which is reflected in the gross margin. Overall, these factors had a substantial negative impact on profit for the quarter.”
