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H&M to report dip in first quarter profits

Swedish fast fashion chain H&M is expected to report a drop in profits when it releases its first quarter results tomorrow morning.

It is expected that rising cotton prices will be cited as the reason for an estimated 24% dive in profits for the three months to February 28.

The retailer has already been hit by the impact of rising cotton prices as profits fell in the last three months of last year. Profit before tax in the three months to November 30 was 5.5bn krona (£534m), down 11% from the 6.15bn (£598m) krona it made a year earlier

H&M has also been hard hit by rising labour costs in Asia, where it buys more goods than some competitors such as Inditex which last week posted strong trading driven by aggressive expansion into developing markets.

On January 31, H&M had 2,210 stores compared with 1,987 the year before.

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