The clothing giant announced plans to quit the country amid sanctions pressure back in July © Getty Images / SOPA Images / Contributor

Swedish clothing multinational H&M has reported a pre-tax profit drop of almost 90% for June-August, citing a consumer spending slowdown and the winding down of its operations in Russia.

Pre-tax profit during that period totalled $60.9 million, down from $538 million in the same period a year ago, the group said in a statement on Thursday.

According to the retail giant, a one-time cost of $185 million related to H&M’s decision to wind down operations in Russia significantly impacted financial performance, accounting for half of the decrease in profits.

“The third quarter has largely been impacted by our decision to pause sales and then wind down the business in Russia. This has had a significant effect on our sales and profitability, which explains half of the decrease in profits compared with the third quarter last year,” Chief Executive Helena Helmersson said.

H&M announced plans to leave Russia in July, citing “operational challenges” amid sanctions arising from the Ukraine conflict. The clothing giant temporarily later reopened physical stores for “a limited period of time to sell remaining inventory.”

Meanwhile, the company’s European business has also been severely impacted, with consumers cutting back on shopping amid record-high energy prices and inflation pressure.

The retailer has announced plans for a cost-cutting programme, expected to result in annual savings of around $177 million, with savings forecast to become visible in the second half of next year.

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