// H&M profits plummet following its exit from Russia and shoppers reining in spending amid sky-high inflation

// The world’s second-largest fashion retailer has launched a £163 cost-saving drive as a result

H&M has reported a sizeable drop in third-quarter profits following its decision to leave the Russian market and a fall in consumer spending amid soaring inflation.

Profits at the Swedish fashion retailer hit £43m – down 89% from last year’s period.

“The third quarter was heavily impacted by the decision to discontinue sales in Russia and then close the business,” Chief executive Helena Helmerson said in a statement.

The company said it would be introducing cost-cutting measures that will result in savings of £163m. It did not give details of where it hoped to make the savings but said the benefits should be felt in the second half of 2023.

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The world’s second-largest fashion retailer is among a slew of Western companies that exited Russia following Moscow’s invasion of Ukraine.

Back in March H&M paused all sales in the country and announced in July that it would wind down operations, although it would reopen stores for “a limited period of time” to offload its remaining inventory.

The business said a £75 million one-off cost for winding down its business in Russia accounted for only about half of the profit drop.

Earlier this month, the group reported lower-than-expected sales for the period as shoppers reined in spending in the face of soaring energy bills and expensive grocery shops but said demand had improved late in the quarter.

“Overall, these factors had a substantial negative impact on profit for the quarter,” Helena Helmersson said.

“We have chosen not to fully compensate for the increased costs, which is reflected in the gross margin.”

The performance substantially underperformed market leader Zara owner Inditex, which saw first-half sales and profits hit historic highs, both surging 24.5%.

It added in this week’s update that the heatwave in many European markets in the summer and delays in the supply chain also weighed on sales.

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