// H&M’s fourth quarter net sales rise by 10% while in local currencies, net sales were flat
// The withdrawal from Russia and its cost-cutting programme cost the retailer almost $252 million in 2022
H&M has blamed high clothes prices, its exit from Russia and a cost-cutting programme for a bid drop in profits in 2022.
The group, whose other brands include COS, Monki and Weekday, saw net sales for the three months to 30 November 2022 rise by 10% to £4.9bn year on year despite store closures in China and Russia.
The retailer’s net sales for the full year between 1 December 2021 and 30 November 2022 increased by 12% year on year to £17.7bn.
The fashion giant was among a slew of foreign companies that pulled operations out of Russia last year after the invasion of Ukraine and Western nations imposing sweeping sanctions on the country.
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“Our decision to wind down the business in Russia, which was an important and profitable market, has had a significant negative impact on our results,” chief executive Helena Helmersson said.
“Rather than passing on the full cost to our customers, we chose to strengthen our market position further,” Helmersson said.
She added: “The hikes in raw materials and freight costs combined with a historically strong US dollar resulted in extensive cost increases for purchases of goods.”
Its withdrawal from Russia and a cost-cutting programme cost the business almost $252 million in 2022.
The Swedish retailer, launched its cost-cutting programme last year which included laying off 1,500 employees worldwide.
The group closed 336 stores worldwide, including 175 in Russia and Belarus.
But the company is more upbeat about 2023, with sales up five per cent in the December-January period.
Helmersson reiterated H&M’s goal for next year of a double-digit operating profit margin from 3.2 per cent in 2022.
Its operating margin was more than 20% in 2010 but has been about half of Zara owner Inditex’s for the past four years.
“Sales in the new financial year have started well,” said Helmersson.
“The external factors are still challenging, but are moving in the right direction.”
She added: “Combined with our investments and efficiency improvements, there are very good prerequisites for 2023 to be a year of increased sales, and improved profitability.”
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