STOCKHOLM–Sweden’s Hennes & Mauritz AB will completely exit Russia given the operational challenges and unpredictable future in the country, leading to one-off costs of around 2 billion Swedish kronor ($191 million), it said Monday.
The fashion retailer
paused all sales in Russia at the beginning of March as a result of the invasion of Ukraine and will now initiate a process of winding down the business in the country.
“After careful consideration, we see it as impossible given the current situation to continue our business in Russia,” Chief Executive Helena Helmersson said.
As part of the winding-down process, the company plans to temporarily reopen physical stores for a limited period of time to sell remaining inventory in Russia, it said.
The SEK2 billion costs associated with the wind-down will be booked in the third quarter of 2022, with around SEK1 billion having a cash flow impact, it said.
A reversal of SEK353 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, it said.
Currently all of H&M’s stores in Russia, Belarus and Ukraine are closed. Together, the 181 stores have around 7,500 employees and represented around 10% of group operating profit before the coronavirus pandemic, in the 2019 financial year.
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