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Swedish retailer H&M sees profits slump after Russia exit

Swedish fashion retailer H&M reported a sizeable drop in third-quarter profit on Thursday following its decision to leave the Russian market.

Swedish retailer H&M sees profits slump after Russia exit
A woman walks past the closed H&M in Moscow back n March 2022. Photo: Kirill Kudryavtsev/AFP)

The world’s number two clothing group is among a slew of Western companies that have exited Russia following Moscow’s invasion of Ukraine.

H&M paused all sales in the country in March and announced in July that it would wind down operations, although it would reopen stores for “a limited period of time” to offload its remaining inventory.

The company said Thursday its net profit fell to 531 million kronor ($47 million) in the third quarter, down 89 percent from the same period last year. “The third quarter has largely been impacted by our decision to pause sales and then wind down the business in Russia,” chief executive Helena Helmersson said in a statement.

The group said in its earnings statement that it would launch cost-cutting measures that would result in savings totalling two billion kronor.

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BUSINESS

German software giant SAP to cut 3,000 jobs

German software giant SAP on Thursday said it planned to cut some 3,000 jobs this year, joining a wave of layoffs in the global tech sector.

German software giant SAP to cut 3,000 jobs

The Walldorf-based group, which offers both traditional software and cloud-based computing services, said it planned to carry out a “targeted restructuring programme” to “strengthen its core business” and improve efficiency.

“The programme is expected to affect approximately 2.5 percent of SAP’s employees,” it said in an earnings report unveiling full-year results for 2022.

SAP has a workforce of around 120,000 employees worldwide, meaning it plans to shed some 3,000 jobs.

There are around 16,000 employees working at its German headquarters in Walldorf, Baden-Württemberg, and it also has offices and research facilities in Berlin under the ‘SAP Labs’ brand. 

It is so far unclear how many of its German workforce will be affected by the layoffs. 

READ ALSO: Working in Germany: Which sectors currently have the most job openings?

The move follows similar cuts announced by tech giants Meta, Amazon, Google, IBM and Microsoft as the once-unassailable sector girds for an economic downturn.

SAP said its jobs cull would cost the company between €250 and €300 million ($270-330 million), mainly in the first quarter of 2023.

The restructuring is expected to lead to annual savings of 300-350 million euros from 2024, “which will help to fuel investments into strategic growth areas”, SAP said.

SAP also said it would explore a sale of its Qualtrics subsidiary, which specialises in online market research software.

A sale would further allow SAP to focus more on its core cloud business, it said.

For the whole of 2022, SAP announced revenues of 30.9 billion euros, up 11 percent on a year earlier.

Operating profits came in at just over 8 billion euros, down two percent compared with 2021.

For 2023, SAP expects operating profits to increase by 10 to 13 percent.

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