H&M Group sales hit by Russia exit

H&M Group has released its financial report for the nine months ending 31 August 2022, revealing a 13% increase in net sales to £13 billion (SEK 161 billion).

The owner of H&M, Monki and Cos emphasised that a one-time cost for winding down its Russian operations has impacted the results for the period.

Excluding the one-time cost, H&M Group shared the following results:

• Gross margin of 51.3%, compared to 51.8% the prior period.
• Operating profit of £650 million (SEK 8 billion), compared to £723 million (SEK 8.9 billion).
• Profit after tax of £463 million (SEK 5.7 billion), compared to £512 million (SEK 6.3 billion).
• Net cash of £1.4 billion (SEK 17.4 billion), compared to £2 billion (SEK 24.8 billion).

Earlier this month, H&M Group reported a 4% drop in net sales in local currencies to £4.6 billion (SEK 57.4 billion) for the third quarter ending 31 August 2022.

The group has now revealed additional Q3 results, reporting a gross margin of 50.4% and an operating profit of £244 million (SEK 3 billion).

Helena Helmersson, CEO of H&M Group, said: "The third quarter has largely been impacted by our decision to pause sales and then wind down the business in Russia. This has had a significant effect on our sales and profitability, which explains half of the decrease in profits

"With loyal customers all over the world, engaged colleagues and sound finances, in combination with a long-term perspective, we see good opportunities to strengthen our position despite the situation in the world around us.

"The autumn collections have been well received and sales in September are up on the previous year, providing important proof that the H&M group is growing even when customers’ purchasing power is decreasing.”

The announcement coincides with the reopening of H&M's Lakeside store today, which introduces the brand's new Home concept to its existing offering.