H&M on Wednesday said it will reduce its workforce by 1,500 positions as part of its previously announced cost-cutting program.
The program overall will save the Swedish fast-fashion retailer 2 billion Swedish Krona ($188 million at press time) each year, according to a company press release.
In September, H&M announced the expense overhaul, including possibly charging customers for returns, saying that its exit from Russia, high freight costs, a strong U.S. dollar and macroeconomic pressures were squeezing profits.
Young consumers are flocking to rival Shein, despite its poor track record in worker rights and other issues, for example. And H&M itself ranked No. 3 among retailers, according to branding agency MBLM’s most recent Brand Intimacy Study. H&M net sales in the first nine months of its fiscal year rose 13% year over year, and this month the retailer opened an experimental concept store in Brooklyn, New York.
But increased raw materials and freight prices, and a strong U.S. currency fueled “substantial cost increases” this year, the company also said in its nine-month report. The savings from its cost cuts are expected to show up in the second half of 2023, the company said. The contribution from the workforce downsizing is unclear.
“The cost and efficiency programme that we have initiated involves reviewing our organisation and we are very mindful of the fact that colleagues will be affected by this,” H&M CEO Helena Helmersson said in a statement Wednesday. “We will support our colleagues in finding the best possible solution for their next step.”