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H&M net profit rises 6.6% to $2.59bn

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STOCKHOLM, Jan 30 AFP

January 30 2013, 9:13PM

Swedish clothing retailer H&M says its net profit rose by 6.6 per cent to 16.9 billion kronor ($A2.59 billion) in 2012 and it increased its market share despite a difficult operating environment.

Gross sales by the world's No.2 clothing retailer rose by 9.4 per cent to 141 billion kronor in the financial year that ended November 30, but net sales measured at constant exchange rates gained only one per cent, the company said.

"H&M continues to stand strong in a challenging clothing market which in many countries has been even more challenging in 2012 compared to 2011," chief executive Karl-Johan Persson said in a statement.

The company said its earnings were hit by the costs of its long-term investments as well as negative currency exchange effects.

It proposed holding the dividend steady at 9.5 kronor per share.

H&M said its expansion was faster than expected in 2012, with 304 new stores, primarily in China and the United States.

The company which makes and sells inexpensive clothes currently has 2,800 stores in 48 markets and more than 104,000 employees.

It plans to open 325 stores in this financial year, including in Chile and in Indonesia via a franchise.

H&M said its new fashion brand & Other Stories, targeted at women, will open its first stores in the coming months in seven European countries.

Persson said despite not yet generating revenue the company believed its long-term investments "to be both necessary and wise as they aim to secure future expansion and profits and thereby further strengthen H&M's position."