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H&M, the world’s second-biggest fashion retailer, reported on Friday a much larger dive than expected in September-November operating profit, slammed by soaring costs and weakening consumer confidence.

Operating profit in the period, the Swedish group’s fiscal fourth quarter, was US$79.7 million against $607.8 million a year earlier and a mean forecast of $356.3 million in a Refinitiv poll of analysts.

“The lower profit in the fourth quarter when compared with the same quarter in the previous year is mainly explained by the negative external factors, loss of the operating profit previously contributed by Russia and the one-time cost of the cost and efficiency programme,” it said in a statement.

H&M in September last year launched a drive to cut costs by 2 billion crowns annually, with savings from layoffs and other measures starting to show from the second half of 2023.

The group flagged in November it would cut around 1,500 jobs book an around $77.7 million restructuring charge in the fourth quarter for the programme.

It last year announced it was exiting Russia due to the country’s invasion of Ukraine.

H&M said sales in the December 1-January 25 period, the start of its fiscal first quarter, were up 5 per cent in local currencies.

  • Reporting by Marie Mannes and Anna Ringstrom in Stockholm, editing by Terje Solsvik, of Reuters.