STOCKHOLM, Jan 27 Reuters Sweden39;s HM reported on Friday a much larger than expected drop in SeptemberNovember profit, hit by weak consumer confidence and soaring costs that it did not fully pass on to price tags, sending its shares down 7 in early trade.

Operating profit in the period, the world39;s secondbiggest fashion retailer39;s fiscal fourth quarter, was 821 million crowns 79.7 million against 6.26 billion a year earlier and a mean forecast of 3.67 billion in a Refinitiv poll of analysts.

HM, which had already reported that sales in the quarter were flat, said on Friday that sales from Dec. 1Jan. 25 the start of its fiscal first quarter were up 5 in local currencies.

The lower profit in the fourth quarter when compared with the same quarter in the previous year is mainly explained by the negative external factors, loss of the operating profit previously contributed by Russia and the onetime cost of the cost and efficiency programme, it said in a statement.

The hit from quitting Russia, higher raw material, freight and energy costs, currency translation effects and the restructuring charge totalled around 5 billion crowns, Chief Executive Helena Helmersson said.

Rather than passing on the full cost to our customers, we chose to strengthen our market position further, she said.

HM in September launched a drive to cut costs by 2 billion crowns annually, with savings from layoffs and other measures expected to start showing from the second half of 2023….