Impact of Russian exit accounts for half of the decrease in profits

  • H&M’s profits decreased by SEK 5.4 billion (£403.5 million) in Q3 due to winding down Russian operations
  • Cost-cutting program expected to save 2 billion crowns, visible in H2 2023
  • Autumn collections saw a 7% YoY increase in local currencies
  • CEO Helena Helmersson cites external challenges like heatwave and supply delays as factors affecting sales

Swedish fashion giant H&M has reported a significant drop in pre-tax profits for its fiscal third quarter from December 1, 2021 to August 31, 2022. The company’s profits fell from SEK 6.09 billion (£220 million) to SEK 689 million (£56.5 million). This decline was largely attributed to a one-time cost of SEK 2.1 billion (£76.1 million) associated with the winding down of its Russian operations, which accounted for half of the decrease in profits. In July, H&M announced its decision to exit Russia following the country’s invasion of Ukraine. The company has also implemented a cost-cutting program that is expected to save around 2 billion crowns, with savings anticipated to become visible in the second half of 2023. Despite external challenges such as a heatwave in Europe and supply delays, autumn collections experienced a 7% year-on-year increase in local currencies from September 1 to 27. CEO Helena Helmersson explained that these factors, along with increased raw materials and freight prices, have had a substantial negative impact on the quarter’s profit.

Factuality Level: 10
Factuality Justification: The article provides accurate and objective information about H&M’s financial performance, including specific reasons for the decrease in profits such as the winding down of Russian operations and external challenges faced by the industry. It also includes quotes from the CEO to support its claims.
Noise Level: 3
Noise Justification: The article provides relevant information about H&M’s financial performance and the reasons behind the decrease in profits, including the impact of winding down operations in Russia and other external challenges. It also mentions a cost-cutting program and the CEO’s comments on the situation. However, it could provide more analysis or context on the industry as a whole and potential long-term trends.
Financial Relevance: Yes
Financial Markets Impacted: H&M’s stock price and other fashion retailers
Financial Rating Justification: The article discusses H&M’s financial performance, including a decrease in profits and cost cutting measures, which can impact the company’s stock price and potentially affect competitors in the fashion retail industry.
Presence Of Extreme Event: No
Nature Of Extreme Event: No
Impact Rating Of The Extreme Event: No
Extreme Rating Justification: There is no extreme event mentioned in the text.

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