H&M had exited one of its most lucrative markets, Russia... and the results are not pleasing.
👉 Background: H&M is another Swedish powerhouse that is the second biggest retailer in the world. Recently, H&M announced it wanted to double sales by 2030.
👉 What happened: But last quarter, H&M reported falling sales and quite the underwhelming pre-tax profit. Net profit fell to just $47 million for the third quarter - down a monstrous 89% from the same period last year.
👉 What else: As a result, H&M’s stock price fell after the news broke, meaning its shares are down 43% this year alone. Eeep. Just goes to show how much a company can suffer when it exits one of its most lucrative markets, like Russia.
💡It has now been 8 months since the Russia & Ukraine war broke out and we’re starting to see the financial pain for companies that have pulled out of a valuable Russian market.
💡In fact, H&M claims that half the drop in profits is due to its winding down of Russian stores. And this has placed more pressure on H&M’s broader European business.
💡But Europe is facing record inflation and currency challenges, as well as a very cold and expensive winter ahead so it will be difficult to imagine the Europeans will pick up the Russian-slack.
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