H&M to exit Russia over ‘impossible’ situation

Swedish retailer Hennes & Mauritz AB will start winding down its operations in Russia, having halted all sales in the country in March after Russia’s attack on Ukraine.

The Stockholm-based company expects to book costs of 2 billion kronor ($190 million) from the process, of which about 1 billion kronor will have a cash-flow impact, it said in a statement. The group plans to reopen physical stores in Russia for a limited period of time to sell remaining inventory.

“After careful consideration, we see it as impossible given the current situation to continue our business in Russia,” CEO Helena Helmersson said.

H&M’s Russian business accounted for about 4% of its 199 billion kronor in sales during the last financial year. The company has operated in the country since 2009. In March, H&M’s head of investor relations, Nils Vinge, said it was “no secret that Russia was one of the most important growth markets of the company.”

The suspension of sales in Russia, Belarus and Ukraine contributed 5 percentage points of an expected 6% decline in revenue last month compared to the same period a year ago, according to the retailer’s latest quarterly report.

The decision by H&M “may put pressure on rival Inditex and even on food retailers Metro and Auchan to consider their own exits,” Bloomberg Intelligence analyst Charles Allen said in emailed comments. “The exit emphasizes the importance of building Latin America as an alternative path to growth while China also remains difficult for the company.”

H&M’s shares fell as much as 1.2% when trading started in the Swedish capital on Monday.

—Bloomberg News