The operational profit for the three months of September through November fell significantly more than projected at H&M, the second-largest fashion retailer in the world, as a result of rising expenses and declining consumer confidence.
Operating profit was 821 million Swedish crowns ($79.7 million) in the period, the Swedish group’s fiscal fourth quarter, compared to 6.26 billion Swedish crowns a year earlier and a mean projection of 3.67 billion in an analyst poll by Refinitiv.
According to a statement from the company, “the lower profit in the fourth quarter when compared with the same quarter in the prior year is mainly explained by the negative external factors, loss of the operating profit previously contributed by Russia, and the one-time cost of the cost and efficiency programme.”
H&M started a campaign to reduce expenses by 2 billion crowns annually in September last year. Starting in the second half of 2023, savings from layoffs and other initiatives will become evident.
The company said in November that it would eliminate 1,500 employees and record a fourth-quarter restructuring charge of approximately 800 million crowns.
It announced its departure from Russia last year as a result of the nation’s invasion of Ukraine.
H&M reported that its sales were up 5% in local currencies from December 1 to January 25, the beginning of its fiscal first quarter.
$1 is equal to 10.2969 Swedish crowns.