Fashion merchant H&M's profit drops over anticipated as prices bite

January 30, 2023: -Sweden’s H&M reported a much higher-than-expected drop in September-November profit on Friday, hit by weak consumer confidence and zooming costs that it did not entirely pass on to price tags.

Operating profit in the period, the second-biggest fashion retailer’s financial fourth quarter, was 821 million peaks against 6.26 billion a year and a mean forecast of 3.67 billion in Refinitiv voting of analysts.

H&M has reported that sales in the quarter were flat, stating on Friday that deals from December. The start of its first financial quarter was up 5% in local currencies.

“The less profit in the fourth quarter compared with the same quarter in the last year is mainly stated by the negative external factors, loss of the operating profit contributed by Russia and the cost and efficiency programme,” it stated.

The reach from quitting Russia, higher raw material, freight and energy costs, currency translation products and the restructuring price totalled almost 5 billion crowns, Chief Executive Helena Helmersson said.

“Instead of passing on the complete cost to our customers, we are choosing to strengthen our market position further,” she stated.

In September, H&M launched a drive to slash the costs by 2 billion crowns annually, with savings from layoffs and different measures expected to start showing in the second half of 2023.

The group flagged in November that it would slash nearly 1,500 jobs and book about 800 million crown restructuring, which charges in the fourth quarter for the programme.

It announced in the previous year it was exiting Russia because the country invaded Ukraine.

H&M has offered a dividend for 2022 of 6.50 crowns for each share, unchanged from the year before, almost matching anticipation.