STOCKHOLM (AFP) - Swedish fashion retailer Hennes and Mauritz posted a rise in profits for the third quarter, saying its price-cut strategy had paid off.
The group reported its biggest profit margin ever, but some in the financial markets had expected even more. H and M shares closed 1.23 percent lower at 200.50 kronor in Stockholm trade.
"H and M recorded its highest-ever gross margin ever in a third quarter, despite a higher level of price reductions than in the corresponding period last year," the company said in a statement.
In the third quarter, which covers the three months to August 31, Hennes and Mauritz had a net profit of 2.45 billion kronor (270.6 million euros), up 18 percent from the 2.07 billion it posted a year earlier.
The gross margin widened to 55.9 percent from 55.6, a new record.
But the result fell short of the highest expectations in the financial market, where analysts' forecasts ranged from 2.2 billion to 2.6 billion kronor for net profit, and centred on a margin of around 56 percent.
But some market participants were sanguine.
"The gross margin could have been a little bit better. I expected 56.2 percent, but this is a company not a machine, and the results overall are very much as expected," Sven Skold analyst at Hagstroemer Qviberg bank told AFX News, AFP's financial news service.
Sales, excluding value-added tax, rose 14 percent to 12.8 billion kronor.
For the first nine months of the company's financial year, net profit was 4.5 billion kroner, up from the previous year's 4.1 billion, while earnings per share increased to 5.45 kronor from 4.98 kronor.
Hennes and Mauritz opened 70 new outlets over the nine-month period, of which 14 were in Germany and seven in Britain. Nine stores were closed.
Looking ahead, Hennes and Mauritz said it hoped to open 65 stores in the fourth quarter, of which 20 will be in Germany, eight in Spain and seven in France.
The clothing retailer now operates a total of 1,006 stores in 20 countries.