STOCKHOLM, June 29 — H&M, the world’s second-biggest fashion retailer, reported stronger than expected March-May profits today and said third-quarter sales were also off to a good start as the company strives to catch up with faster-growing rivals.

Operating profit in the Swedish group’s March-May fiscal second quarter was 4.74 billion Swedish crowns (US$438.55 million) down from 4.98 billion a year earlier but ahead of a mean forecast of 4.07 billion in a Refinitiv poll of analysts.

H&M, which has lagged Zara owner Inditex, has sought to raise its fashion appeal and boost its higher-priced brand Cos, targeting shoppers less vulnerable to the rising cost of living as fast-fashion giant Shein takes market share with cheap clothes.

"The summer collections have been well received and the third quarter has got off to a good start,” Chief Executive Helena Helmersson said in a statement.

"The conditions for increased growth as well as profitability continue to develop in a favourable direction,” she added.

Local-currency sales for June 1-27, the first month of H&M’s third quarter, rose by 10 per cent compared with the corresponding period last year.

H&M’s operating profit margin in the second quarter was 8.2 per cent, down from 9.2 per cent a year earlier, while the group reiterated its goal of a 10 per cent margin next year, which analysts have said could be hard to reach.

The group last year announced layoffs and other cost cuts that it said at the time would help it save costs from the second half of 2023 onwards.

H&M’s share price has risen 27 per cent in the last 12 months, lagging a 58 per cent increase in Inditex stock. — Reuters