PARIS – H&M Group’s Russia exit and one-time costs caused the retailer’s profits to plunge within the three months to Nov. 30.

Within the fourth quarter of its most up-to-date fiscal 12 months, H&M’s operating profit totaled 821 million Swedish kronor, or $79.7 million, versus 6.26 billion kronor in the identical prior-year period, representing an 86.9 percent decrease.

“The lower profit within the fourth quarter compared with the identical quarter within the previous 12 months is principally explained by the negative external aspects, lack of the operating profit previously contributed by Russia and the one-time cost of the associated fee and efficiency program,” the Swedish fast-fashion retailer said on Friday.  

The group in September unveiled a cost-cutting program through which it hoped to scale back its overheads, simplify its organizational structure, facilitate quick decision-making and take away layers. The changes were expected to take around six to nine months, and bear fruit starting within the second half of 2023.

In late November, H&M group said it would cut back its workforce by about 1,500 employees.

It has been a difficult period for fashion’s mass-market players, as consumers tighten their purse strings in a context of rising inflation.

H&M also said that sales between Dec. 1, 2022, and Jan. 25, 2023, marking the start of its recent fiscal quarter, increased 5 percent in local currencies against the identical period in 2022. Excluding Russia, Belarus and Ukraine, company sales were up 9 percent in local currencies.

“Sales in the brand new financial 12 months have began well,” said Helena Helmersson, chief executive officer of H&M Group. “The external aspects are still difficult, but are moving in the correct direction.

“Combined with our investments and efficiency improvements, there are superb prerequisites for 2023 to be a 12 months of increased sales, and improved profitability,” she continued. “Thus, our goal of achieving a double-digit operating margin for full-year 2024 stays in place.”