Swedish fashion group Hennes & Mauritz posted a 20 per cent rise in third-quarter profit that missed forecasts today, with strong August sales offset by rising costs that ate into gross margins.
The clothing retailer, the world's third biggest by sales, fared well during the downturn thanks to its geographical spread and focus on high fashion at knock-down prices, and has benefited in recent months from a global recovery as consumers returned to the shops.
Pretax profit in H&M's fiscal third quarter - June to August - was 5.735 billion Swedish crowns (€621 million), compared with an average forecast for 6.104 billion.
August sales in comparable units rose 14 per cent.
Arch rival, Spanish group Inditex, the world's biggest clothing retailer which owns the Zara and other brands, beat forecasts last week with a near 70 per cent rise in first-half net profit thanks to a pick-up in consumer demand.
Analysts say H&M has been gaining market share in key centres such as Germany which saw its fastest quarterly economic expansion since reunification in the second quarter.
However, there are worries in Europe that moves to rein in government debt could hurt consumer spending in the months ahead while the recovery in the United States remains shaky.
H&M said positive effects from external factors such as the dollar exchange rate, spare capacity at suppliers, transportation costs and raw material prices had gradually diminished during the quarter, leading to a 60.5 per cent gross margin that was below a forecast for 62.3 per cent.
Reuters