Swedish giant H&M has paused all sales in Russia. The H&M Group on Monday announced that it has decided to initiate a process of winding up the business in the country. The reasons cited were: "current operational challenges" and "an unpredictable future."
The follow up: The announcement follows a 2 March indication when the H&M Group had expressed deep concern over the "tragic developments in Ukraine and stand with all the people who are suffering." The H&M Group had then decided to temporarily pause all sales in Russia. The stores in Ukraine at that point had already been temporarily closed due to the safety of customers and colleagues.
The background: The H&M Group has run operations in Russia since 2009. The company said it regretted that business cannot "continue under the current circumstances and that many colleagues are affected as a consequence."
What's being done: The focus now is to ensure a responsible winding up of operations and support all colleagues concerned in the best possible way over the coming months.
- As part of the winding down process, the intention is to temporarily reopen physical stores for a limited period of time to sell remaining inventory in Russia.
- The entire winddown is expected to lead to costs for the H&M group amounting to a total of SEK 2 billion, of which SEK 1 billion will have a cash flow impact.
- The full amount will be included as one-time costs in the results for the third quarter 2022.
- A reversal of the SEK 353 million in unrealized exchange gains in respect to intragroup receivables in Russian rubles from the second quarter 2022 is included in the one-time cost.
What they said:
After careful consideration, we see it as impossible given the current situation to continue our business in Russia. We are deeply saddened about the impact this will have on our colleagues and very grateful for all their hard work and dedication. Furthermore, we wish to thank our customers for their support throughout the years.
— Helena Helmersson
Chief Executive Officer
H&M Group
