By Dhirendra Tripathi

Investing.com – H & M (ST:) stock plunged 10% in Stockholm trading Thursday after the fashion retailer reported earnings that were way off expectations for the first quarter.

The stock was trading at its lowest level in two years. Numerous headwinds, such as the Russia-Ukraine conflict and China lockdowns, and investments in technology or the supply chain, had a negative impact on results.

The group made a profit pretax of 282,000,000 crowns (or $30 million), despite having suffered a loss in the previous year of 1.39billion. However, this was still well below the forecast 1.05 billion crown profit that Bloomberg polled.

“Sales and profits for the quarter were impacted by the negative effects of the pandemic in many of the group’s major markets,” H&M said in a statement, citing supply chain disruptions and delays, and a new wave of Covid-19 in some markets.

Russia is the sixth largest market for H&M, and accounts for around 4% of its total revenues. The retailer has stopped selling in Russia. H&M had 227 stores closed as of Wednesday, most of them in Russia, Belarus and Ukraine. The newswire reported that revenue increased 11% for March without accounting for these three countries.

Covid lockdowns related to the Chinese market, which is one of the largest markets for its products have caused significant disruption to this company. China is a zero Covid country and its strict regulations are causing serious harm to retailers. Some of the retailers have also suffered due to a rising sentiment against foreign labels in the world’s second largest economy.

Although sales increased 23% to 49.16 Billion Swedish Crowns in the fourth quarter, they were still 11% lower than the previous period.

H&M, the world’s second-biggest fashion retailer after Zara-owner Inditex (MC:) Sales for March 1 – 28 were only 6% higher in local currency.