The company suspended its business in Russia in early March in the wake of Western sanctions against Moscow following its invasion of Ukraine.
Russia was H&M’s sixth-biggest market. The company was increasing its store count while reducing physical stores in many other markets.
Shares in H&M were down 0.5% at 1250 GMT, lagging a 1.4% rise in the Stockholm bourse’s benchmark index.
The entire wind-down is expected to cost about 2 billion Swedish crowns ($191.3 million), of which about 1 billion crowns will have a cash flow impact, H&M said. The full amount will be included as one-time costs in the results for the third quarter.
Russia was one of H&M’s fastest-growing markets and one of its most profitable, said RBC Capital Markets Richard Chamberlain, calling the decision to pull out somewhat inevitable.
Stores About to Sell Remaining Stuff
A spokesperson said that H&M intends to temporarily reopen physical stores in August to sell the remaining inventory in Russia.
A spokesperson said that the shutdown would affect the company’s 170 physical stores in the country. Accordingly, it will also affect its online sales channels. H&M rents the stores and operates them directly.
Moreover, several other retailers, including Inditex (BME: ITX) and Adidas (OTC: ADDYY), have halted sales in the country. In contrast, U.S.-based fashion retailer TJX (NYSE: TJX) and Poland’s biggest fashion retailer LPP decided to sell their businesses in Russia.
H&M’s biggest rival, Zara-owner Inditex, told shareholders last week that it would keep operations suspended for the time being.