The job cuts will help H&M save 2 billion Swedish crowns ($190 million) a year
Becoming the first big European retailer to sack staff, Swedish fashion giant H&M has decided to start laying off 1,500 employees globally, which will help it save 2 billion Swedish crowns ($190 million) a year. The world’s No.2 fashion retailer is laying off employees amid high inflation and surging costs due to the Ukraine-Russia war.
Apart from H&M, US food delivery service DoorDash Inc has also said it is cutting about 1,250 jobs in an effort to rein in expenses.
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H&M currently employs about 155,000 persons globally. “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 was quoted by news agency Reuters as saying.
The job cuts by H&M comes close on the heels of the IT companies globally are laying off their employees. In a series of IT sector layoffs, Amazon, Meta and Twitter have laid off employees. Mark Zuckerberg, CEO of Facebook’s parent company Meta Platforms, on November 9 said the company has decided to reduce the size of its team by about 13 per cent and let more than 11,000 employees go. Twitter has also laid off 50 per cent of its employees.
Now, Google and HP are also planning layoffs. Alphabet, Google’s parent company, is reportedly gearing up to lay off about 10,000 “poor performing” employees, or 6 per cent of its workforce. US tech giant HP CEO Enrique Lores has also said the company will cut the size of its workforce in the next three years and expects to reduce it by 4,000 to 6,000 persons. He added that while these are difficult decisions, he is doing what is best for the company’s business.
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In September H&M posted much lower-than-expected quarterly sales as it saw consumers tighten their belts, highlighting its struggle to compete with its bigger Inditex-owned rival, Zara. H&M also faces stiff competition from cheaper rivals and online-only brands. British fashion retailer Primark has announced plans to add 1,800 jobs in Spain and Britain as it expands.
“Shoppers are showing signs of trading down and hunting out bargains, so the pressure is on H&M to compete with chains seen as offering greater value, from Primark in high streets to Boohoo and Shein online,” Streeter of Hargreaves Lansdown said, according to a Reuters report.
H&M said its savings would start to kick in from the second half of next year, while it will take a restructuring charge of 800 million Swedish crowns in the fourth quarter.
(With Inputs From Agencies)
