H&M has seen its profits plummet last year, while analysts were instead counting on a positive evolution in the fourth quarter. The fashion giant thinks it is all (directly or indirectly) Putin’s fault: there were high costs in leaving Russia, disappointing exchange rates and more expensive raw materials.
H&M Group had to announce disappointing results again: For its fiscal year 2022 (from December 2021 to November 2022), net profit fell by 68 %. In the fourth quarter, the world’s second largest fashion retailer even recorded a net loss of 864 million kroner (80 million euro), while analysts had actually expected more profit.
CEO Helena Helmersson blames a series of, mainly external, factors. Withdrawing from Russia cost the group a lot of money, while the dollar was at an all-time high. Moreover, the fashion giant chose not to pass on all the cost increases (especially raw material and freight costs) to consumers in order to preserve market share.
5 billion euros gone
In the autumn, the group announced it was laying off some 1,500 employees, which means the group is also incurring reorganisation costs. H&M Group says all factors combined took as much as five billion euros off its profits. Full-year sales rose 12 %, although excluding currency effects, only 6 % of that remained.
Things have been moving in the right direction since December though, Helmersson says, even if “external factors are still difficult”. The CEO expects improvement in 2023, both in terms of sales and profitability. Last year’s investments and efficiency improvements should help in this regard.