Jan. 27 (Reuters) – STOCKHOLM With rising costs that the Swedish company refrained from fully passing on to cash-strapped customers, fashion retailer H&M’s (HMb.ST) profits were nearly wiped out in the September-November quarter.
Even though the price increases did not cover the full increase in inputs like energy, transportation, and raw materials, the world’s second largest fashion chain will continue with this pricing strategy.
At a press conference on Friday, Helmersson said that in order to partially offset continuing high costs, the company would continue raising prices in some categories and to varying degrees across different markets.
It’s a “very dynamic pricing strategy,” she remarked to Reuters. “The first three months of 2023 will be extremely trying. And then, obviously, we’ll have to raise prices, though not by enough to cover everything.”
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The company attributed the decline in earnings to a number of factors, including its decision to cease operations in Russia and the resulting financial impact of a cost-cutting drive announced in 2016.
Profit before taxes for the period totaled 463 million Swedish crowns ($44.94 million), down from 6.0 billion in the prior year for the world’s second-largest fashion retailer. Experts surveyed by Refinitiv predicted a decrease to 3.5 billion crowns.
The 10% increase in H&M’s stock price over the course of the year was capped at 12:22 GMT, when the stock price fell 6%.