STOCKHOLM — Swedish fashion retailer H&M said Monday it has decided to cease operations in Russia after suspending all sales there in March following Moscow’s invasion of Ukraine.
The company cited “current operational challenges and an unpredictable future” as the basis for its decision-making.
“After careful consideration, we find it impossible to continue our business in Russia given the current situation,” H&M Group CEO Helena Helmersson said in a statement.
“We are deeply saddened by the impact this will have on our colleagues and very grateful for all of their hard work and dedication,” she added.
H&M, which employs about 6,000 people in Russia and has operated in the country since 2009, said it would reopen stores in Russia “for a limited period to sell excess inventory” as part of the exit process.
He said the entire liquidation is expected to cost the group about 2.0 billion Swedish krona ($192 million), of which about 1.0 billion would impact cash flow.
“The full amount will be reflected in third quarter 2022 results as a one-time charge,” the company said.
Despite halting sales in Russia, Ukraine and Belarus, H&M’s sales rose 17% year-on-year to 54.5 billion between March and May, while net profit rose 33% to 3.7 billion.
The Russian invasion of Ukraine triggered unprecedented sanctions and an exodus of foreign businesses, including Starbucks and McDonalds, as well as several large Nordic companies.
In June, furniture giant Ikea announced that it would “reduce” its operations in Russia and Belarus. They had been suspended since early March.
Swedish networking equipment maker Ericsson announced in April that it would shut down all Russian operations “indefinitely”, while truck maker Volvo halted sales and production at its Kaluga plant.
Denmark’s Lego, the world’s largest toymaker, announced in early July that it was “indefinitely ceasing its business activities” in Russia, ending its partnership with the retail conglomerate, which operated 81 stores on behalf of the Mark.
In early May, Russia put Lego products on a list of goods that can be imported without the consent of the intellectual property owner to circumvent restrictions imposed due to the conflict in Ukraine.
Among the list released by the Ministry of Industry and Trade were Apple and Samsung smartphones, major car brands, game consoles and spare parts used in various industries.
- Editor/ main report by AFP
