H&M to lay off employees amid soft demand, soaring inflation

Stockholm-headquartered fashion label Hennes & Mauritz (H&M) announced 1,500 job cuts citing lesser consumer demand due to soaring inflation in the countries that constitute its core market base. After Paris-based Louis Vuitton, H&M is the world’s second richest fashion label and sells its “disposable fashion” in 53 countries worldwide. 

The development comes amid rising cost of living crisis in European countries stoked in-part by escalation of conflict between Russia and Ukraine. The crisis has pushed companies across Europe and the United States to take drastic steps to weather the period of uncertainties.

H&M employs about 155,000 people worldwide. The current cuts are aimed at saving 2 billion Swedish crowns per year ($189.5 million).

The company said the savings would begin from the second half of next year, while it will take a restructuring charge of 800 million Swedish crowns ($75.80 million) in the fourth quarter.

“We are in a big transition and the whole retail industry is facing a lot of challenges,” H&M’s investor relations head Nils Vinge told Reuters, pointing to headwinds from the pandemic, the Ukraine war and rising input, freight and energy costs.

“It’s very clear that when consumers have paid for their food, energy, gas, and so on there is less to spend. So what is obvious is that demand for value for money increases”.

The lion’s part of the cuts would be made in Sweden, Vinge said.

While high-street retailers are struggling due to stiff competition from online-only brands, British fashion retailer Primark has recently announced plans to add 1,800 jobs in Spain and Britain as it benefits from shoppers trading down in price.

You can now write for wionews.com and be a part of the community. Share your stories and opinions with us here.