On Thursday, H&M launched a 2 billion Swedish crown (USD 177 million) cost savings drive after reporting weaker-than-expected profits due to rising input costs, decelerating consumer spending and its exit from Russia.
It is to be noted that H&M does the bulk of its business in Europe. The Ukraine conflict, high energy prices and inflation are weighing on consumer confidence. Households are cutting back on expenditure as they brace for tougher times.

In the June-August period, pretax profit declined to 689 million crowns (USD 60.9 million) from 6.09 billion a year earlier. The average forecast was a 2.98 billion crown profit. However, H&M did not give details of where it hoped to make cost savings but said the benefits should be felt in the second half of 2023. After the news, its shares were down 3 per cent in mid-morning trading, taking a year-to-date drop to 43 per cent.

Also, the company said a 2.1 billion crown one-off cost for winding down its business in Russia accounted for only about half of the profit fall. Earlier in September, the company reported lower-than-expected sales for the period as shoppers reined in spending in the face of surging energy and other living costs. However, it said demand had improved late in the quarter.

Founded by Erling Persson in 1947, H&M (Hennes & Mauritz) operates in about 75 geographical markets with 4,702 stores under the various company brands. Headquartered in Västerås, it is the world’s No two fashion retailer.