PARIS — H&M group said Wednesday that it would reduce its workforce by about 1,500 people.
The Swedish fast-fashion giant in September had unveiled a cost-cutting program through which it hopes to reduce its overheads, simplify the organization, facilitate quick decision-making and remove layers. The changes are expected to take around six to nine months and bear fruit starting in the second half of next year.
H&M said it estimates the workforce reduction will provide annual savings of around 2 billion Swedish kronor, or $189.8 million, which are expected to become visible in the second half of 2023. The program, according to the company, should result in a restructuring charge of just over 800 million in the fourth quarter of this year.
“The cost and efficiency program that we have initiated involves reviewing our organization, and we are very mindful of the fact that colleagues will be affected by this,” Helena Helmersson, chief executive officer of H&M, said in a statement released Wednesday. “We will support our colleagues in finding the best possible solution for their next step.”
As previously reported, in the third quarter of this year, winding down its Russian operations, increased raw materials and freight costs, the strong dollar and weak sales in many of its major markets all had a knock-on effect on H&M’s profitability.
In the three months ended Aug. 31, the retailer reported operating profit of 902 million Swedish kronor, compared to 6.27 billion Swedish kronor in the same prior-year period.
Company net profit came in at 531 million Swedish kronor, versus 4.69 million Swedish kronor.
H&M’s net sales in the third quarter totaled 57.45 billion Swedish kronor, up 3 percent in reported terms but down 4 percent in local currencies on-year.