Fashion retailer H & M has reported a massive drop in its profits after pulling out of Russia.

The Swedish retailer has also been hit by a drop in customer spending due to high inflation.

Profits have fallen to £43 million, which is down 89 percent from last year.

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Chief executive Helena Helmerson said: “The third quarter was heavily impacted by the decision to discontinue sales in Russia and then close the business.”

H & M said it would be introducing cost-cutting measures to save £163 million.

No details have been revealed of how it plans to do this, but says the changes should be in place by the second part of next year.

The fashion giant stopped its sales in Russia in March and then announced it was pulling out of the country in July, reopening stores briefly to sell off excess stock.

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The move cost £75 million.

The group has also reported lower-than-expected sales for the period as shoppers have reduced their spending due to high energy bills and more expensive groceries.

Helmersson added: “Overall, these factors had a substantial negative impact on profit for the quarter.”

“We have chosen not to fully compensate for the increased costs, which is reflected in the gross margin.”

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