According to the announcement, compared with 2021, H&M’s net profit last year fell by nearly 2.6 billion kronor ($252 million), or 68%, to nearly 3.6 billion kronor ($350 million).
An H&M store (Source: Shutterstock)
On January 27, Swedish multinational fashion retailer H&M announced a sharp drop in profits in 2022, with an unexpected loss in the fourth quarter as the retailer exits Russia and faces expenses production costs increased.
According to the announcement, compared with 2021, H&M’s net profit last year fell by nearly 2.6 billion kronor ($252 million), or 68%, to nearly 3.6 billion kronor ($350 million). Meanwhile, net sales increased 12% to 223.6 billion kronor ($21.72 billion).
The decision to stop doing business in Russia, along with a cost-cutting program, were two of the factors that caused the company’s profits to drop.
In addition, the world’s second largest fashion retailer after Inditex – the owner of the Zara fashion chain, is also affected by the strengthening of the US dollar, as well as increased transportation, material and energy costs. . To cut costs, the airline closed 336 stores and laid off 1,500 employees worldwide.
H&M Chief Executive Officer (CEO) Helena Helmersson admitted that leaving Russia, an important and profitable market, had a negative impact on the company’s business results. However, instead of raising the prices of items, H&M chose to consolidate its larger position in the market.
The airline is also more optimistic about the business situation in 2023, with sales “booming” in the new financial year, up about 5% from December last year to January this year.
CEO Helmerson said that although external factors still pose many challenges, the company is on the right track.