Swedish fashion retailer H&M said on Monday it has decided to shut down operations in Russia after halting all sales in March following Moscow’s invasion of Ukraine.
The company cited “current operational challenges and an unpredictable future” as the basis for the decision.
“After careful consideration, we consider the current situation impossible for us to continue our business in Russia,” H&M Group CEO Helena Helmerson said in a statement.
“We are deeply saddened by the impact this has had on our partners and are extremely grateful for their hard work and dedication,” he said.
H&M, which has about 6,000 employees in Russia and has been operating in the country since 2009, said it would reopen stores in Russia as part of an exit process “for a limited time to sell the remaining inventory”. .
It said the entire wind-down was expected to cost the group about 2.0 billion Swedish kronor ($192 million), of which there would be a cash flow impact of about 1.0 billion.
“The entire amount will be included as a one-time cost in the third quarter 2022 results,” the company said.
Despite halting sales in Russia, Ukraine and Belarus, H&M’s sales rose 17 percent to 54.5 billion between March and May compared to the same period a year ago, while net profit rose 33 percent to 3.7 billion.
The Russian invasion of Ukraine triggered unprecedented sanctions and an exodus of foreign corporations including Starbucks and McDonald’s and several large Nordic companies.
In June, furniture giant Ikea said it would “reduce” its activities in Russia and Belarus. He was suspended since early March.
Swedish network equipment maker Ericsson announced in April that it would suspend all Russian operations “indefinitely” while truck maker Volvo halted sales and halted production at its Kaluga plant.
Denmark’s Lego, the world’s largest toy maker, announced earlier in July that it would “indefinitely cease commercial operations” in Russia, ending its partnership with the retail group that 81 operates the store.
In early May, Russia placed Lego products on a list of goods that could be imported without the intellectual property owner’s agreement, in order to circumvent sanctions imposed on the conflict in Ukraine.
The list, published by the Ministry of Industry and Commerce, included Apple and Samsung smartphones, major car brands, game consoles and spare parts used in various industries.
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