COPENHAGEN, Nov 30 (Reuters) – Swedish fashion giant H&M (HMb.ST) on Wednesday became the first major European retailer to start layoffs by announcing 1,500 job cuts due to subdued demand as consumers cope with rising inflation.

The move by the world’s No.2 fashion retailer comes as rising living costs and the blow from the Ukraine war hurt consumer spending and pressured businesses across Europe and the US to save money.

The cuts from the company, which employs about 155,000 people, are part of a plan launched in September to save 2 billion Swedish kronor a year.

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

“We are in a major transformation and the entire retail industry is facing many challenges,” H&M’s head of investor relations Nils Vinge told Reuters, pointing to headwinds from the pandemic, the Ukraine war and rising input, shipping and energy costs.

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

The lion’s share 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 the UK as it benefits from shoppers shopping down prices.

($1 = 10.5546 Swedish kronor)

Reporting by Stine Jacobsen, additional reporting by Terje Solsvik in Oslo, editing by Louise Heavens and Arun Koyyur

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