H&M profits hit by surging costs and wary shoppers

H&M, the world’s No.2 fashion retailer, launched a 2 billion Swedish crown ($177 million) cost
savings drive on Thursday after reporting weaker-than-expected profits due to soaring input
costs, slowing consumer spending and its exit from Russia.
Pretax profit in the June-August period, the Swedish group’s fiscal third quarter, fell to 689
million crowns ($60.9 million) from 6.09 billion a year-earlier. Five analysts polled by Refinitiv
had on average forecast a 2.98 billion crown profit.
The company 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. Its shares fell around 7% in early trading.
H&M (HMb.ST) said a 2.1 billion crown one off-cost for winding down its business in Russia,
announced in July, accounted for only about half of the profit drop.
It had earlier this month posted lower-than-expected sales for the period as shoppers reined in
spending in the face of soaring energy and other living costs, but said demand had improved
late in the quarter
It said on Thursday a heat wave in many European markets and delays in the supply chain also
weighed on sales.
Meanwhile, increased raw materials and freight prices, and a stronger U.S. dollar, resulted in
substantial cost increases for purchases of goods.
“Overall, these factors had a substantial negative impact on profit for the quarter,” CEO Helena
Helmersson said. “We have chosen not to fully compensate for the increased cost, which is
reflected in the gross margin.”

One thought on “H&M profits hit by surging costs and wary shoppers

Leave a Reply

Your email address will not be published. Required fields are marked *