Swedish retail giant Hennes & Mauritz has announced that first quarter profits rose in line with expectations. Net profits increased 20.5 percent to Skr 1.8 billion (£132 million), while operating profits were up 16 percent to Skr 2.57 billion. Group turnover increased 20 percent to Skr 15 billion, although with comparable exchange rates, the increase was 14 percent.

However, the company emphasized that store sales had been affected by a late spring, cold weather in March and a late Easter, which resulted in "very weak sales" specifically in central Europe. Although profits remained strong, margins slipped somewhat because of increased costs of new textile quotas for China and a slightly higher dollar exchange rate.

Chief executive Rolf Eriksen has managed to bring the company to record profitability through cost cutting and recruiting major designers to enter into collaborations with H&M. The retailer chain said it would open a further 150 stores this year, 54 of which are planned for the second quarter. Most store openings will take place in the US, Germany, Holland, Spain and Poland. It also has plans to expand into Greece, where it will open its first store next spring. Some analysts have indicated that they are concerned by the company's weak spring/summer collection launch, reports the FT.

www.hm.com 29 March 2006