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UK trade a bright spot for H&M as credit crunch bites

UK sales at Swedish fast-fashion giant H&M climbed 11% to SEK5.17 billion (£421 million) for the first nine months of the year, bucking the downturn on the rest of the UK high street.

The retailer’s UK sales for the third quarter to August 31 rose 17% to SEK1.7bn (£138m).

Chief financial officer Leif Persson said the UK had seen a sales uplift in like-for-likes on a local currency basis. However, over the nine-month period the increase was wiped out by currency differences.

He added that he was pleased with the UK performance and was planning to open more stores including a shop at Westfield London, the new shopping centre in London’s White City which is due to open at the end of the month.

H&M opened stores in Bristol and Leicester last month.The total number of storeswhich opened in the UK over the reported period was 11.Persson said there were no immediate plans to open more standalone stores for its Divided denim concept, following its debut in Camden in north London in April this year.

However, H&M’s group profits for the period were below market expectations and gross margin fell as the company was hit by the credit crunch. Total sales at H&M rose 12% for first nine months of the year, but like-for-like sales over the period were flat. Total sales excluding VAT over the period rose 12% to SEK62.2bn (£5.07bn). Profits after financial items were up 9% to SEK14bn (£1.14bn).

The company said that sales during the third quarter also rose 12% to SEK20.8bn (£1.7bn), while sales in August were up 8% in local currencies compared with the same month last year.H&M said that cutting prices had helped boost sales in the third quarter, and that gross margin dropped by 0.4 of a percentage point to 60.8%.

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