H&M joins TJX and others in leaving Russia
In a statement released on Monday, July 18, H&M, the world’s second-largest fashion retailer, announced that it will close its Russian operation, a decision that will cost about $200 million and harm 6,000 employees.
The corporation ceased operations in Russia in early March following sanctions imposed by the West in response to Moscow’s invasion of the Ukraine.
As H&M’s sixth-largest market, Russia had a significant increase in the number of physical stores, whereas many other markets saw a decrease in physical stores.
Helena Helmersson, the company’s CEO, said in a statement that “after serious analysis, we believe it is difficult for us to continue our business in Russia.”
This will have a profound effect on our colleagues, Helmersson stated but did not clarify. About 6,000 of the company’s employees in the country will be affected, according to a corporate representative.
At 1250 GMT, shares of H&M were down 0.5%, trailing the benchmark index of the Stockholm Stock Exchange by 1.4%.
One billion of the estimated 2 billion Swedish crowns ($191.3 million) wind-down costs will have a cash flow impact, according to H&M. Costs for the third quarter will include the entire amount as one-time expenses.
According to Richard Chamberlain of RBC Capital Countries, H&M’s decision to leave Russia was “somewhat inevitable,” despite the country being one of the company’s fastest-growing and most profitable markets.
According to a company spokeswoman, H&M plans to reopen physical stores in Russia in August in order to clear off the remaining stock.
According to a corporate spokeswoman, the suspension will impact the company’s 170 physical stores around the country as well as its online sales channels. The stores are owned and operated by H&M, not by a third party.
Inditex and Adidas have also ceased operations in Russia, while TJX and LPP, two of Poland’s largest fashion shops, have decided to exit the nation.
Inditex, the owner of Zara and H&M’s main rival, announced last week that it will cease operations for the time being.
Everybody affected by the suspension is being contacted, and we’re looking at other options. Inditex CEO Oscar Garcia Maceiras remarked, “At this point, there is no other option than to continue to observe the situation.”
Russia has approved so-called “parallel imports,” which allow retailers to import goods from other countries without authorization from the trademark owner.