Fashion retailer H&M joins TJX, others exiting Russia

STOCKHOLM, July 18 (Reuters) – H&M ( HMb.ST ), the world’s second-biggest fashion retailer, said on Monday it will close its business in Russia, a move that will cost almost $200 million and will affect 6,000 staff as it merges. a growing number of companies exiting the country entirely.

The company suspended its business in Russia in early March, following Western sanctions against Moscow following its invasion of Ukraine.

Russia was H&M’s sixth-largest market, and the company was increasing the number of its stores there, while reducing brick-and-mortar stores in many other markets.

“After careful consideration, we find it impossible given the current situation to continue our business in Russia,” Chief Executive Helena Helmersson said in a statement.

“We are deeply saddened by the impact this will have on our colleagues,” Helmersson said, but did not elaborate. A company spokesman said around 6,000 employees in the country would be affected.

H&M shares were down 0.5% at 1250 GMT, lagging behind a 1.4% rise in the main Stockholm stock index (.OMXS30).

The entire closure is expected to cost about 2 billion Swedish kronor ($191.3 million), of which about 1 billion kroner will have an impact on cash flow, H&M said. The full amount will be included as a one-time cost in the results for the third quarter.

Russia was one of H&M’s fastest-growing markets and one of its most profitable, RBC Capital Markets Richard Chamberlain said, calling the decision to pull out “somewhat inevitable.”

H&M plans to temporarily reopen physical stores in August to sell remaining inventory in Russia, a spokesman said.

The closure will affect the company’s 170 physical stores in the country and its online sales channels, a spokesman said. H&M leases the stores and runs them directly.

Several other retailers including Inditex ( ITX.MC ), Adidas ( ADSGn.DE ) have discontinued sales in the country, while U.S.-based fashion retailer TJX ( TJX.N ) and the largest of fashion in Poland, LPP ( LPPP.WA ) decided to sell their businesses in Russia. Read more

H&M’s biggest rival, Zara owner Inditex ( ITX.MC ), told shareholders last week it would keep operations on hold for now. Read more

“We are in contact with all the actors affected by the suspended measure and are considering different alternatives… But at this moment there is no other decision than to continue to monitor the situation,” said Inditex CEO Oscar Garcia Maceiras.

Hit by sanctions and supply chain problems, Russia has legalized so-called parallel imports, which allow retailers to import products from abroad without the trademark owner’s permission. Read more

($1 = 10.4543 Swedish kroner)

Reporting by Anna Ringstrom and Supantha Mukherjee in Stockholm; Corina Pons in Madrid; writing by Supantha Mukherjee and Gwladys Fouche; Editing by Niklas Pollard, Emelia Sithole-Matarise and Susan Fenton

Our Standards: The Thomson Reuters Trust Principles.