Analysts see downside risk if the fashion retailer decides to quit Russia permanently
Stockholm — Sweden’s H&M is seen swinging back to profit in its December-February quarter as the effects of the Covid-19 pandemic ease, but the closure of its Russian stores and the economic fallout from the war in Ukraine have made the company’s outlook more uncertain.
In the year-ago period, when nearly half of stores closed due to the second wave of the pandemic, H&M made a 1.39-billion kronor loss. Two years ago, it made a 2.5-billion kronor profit. Some companies, such as brewer Carlsberg, have decided to exit Russia permanently, while the Kremlin has threatened to seize assets of companies that pull out.
H&M’s sales halt in Russia follows a sharp drop in demand in China over the past year, related to concerns the group has expressed about workers’ rights in the cotton-growing province of Xinjiang. China had accounted for about 4% of H&M’s sales.
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