(c) 2009 
Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.STOCKHOLM -- Hennes & Mauritz AB on Thursday posted a 6.4% rise in fiscal second-quarter net profit, as it continued to fare better during the economic downturn than many of its rivals.
Sweden-based H&M -- the world's third-largest fashion retailer after U.S.-based Gap Inc. and Spain's Inditex SA, which vie for the top spot -- said its net profit increased to 4.19 billion Swedish kronor ($528.8 million) in the three months ended May 31 from 3.94 billion kronor a year earlier. Revenue rose 23% to 26.54 billion kronor.
The company said it "remains positive toward future expansion and the company's business opportunities."
H&M's quarterly earnings were "strong throughout," said Evli Bank retail analyst Anders Wiklund in Stockholm.
The retailer said the economic downturn has hurt demand in all its markets, especially in Spain, the U.S. and the Nordic countries. Still, Mr. Wiklund said the company is clearly handling the rocky times better than many other retailers, largely thanks to its low-price profile and strong brand name. "Everyone is affected by the downturn, but one continues to see that H&M is doing relatively well," he said.
H&M said its total sales for May were flat from a year earlier, while sales from stores open longer than a year fell 9%. Analysts expected May sales to be relatively weak because of exceptionally strong figures a year earlier, when total sales rose 25% and same-store sales grew 14%.
The upbeat earnings report comes days before Karl-Johan Persson, the 34-year old son of H&M's majority owner and grandson of its founder, takes over as chief executive.
Rolf Eriksen, who has been leading the company since 2000 and turns 65 this fall, is retiring next week. Mr. Eriksen said in an interview that H&M continues to win market share as many other retailers are suffering during the harsh economic environment.
"In a downturn, I think you should look more at how we're doing against the market than how we're doing compared to the previous year," Mr. Eriksen said.
The outgoing CEO said he is most satisfied by H&M's decision to stick to the idea of expanding the number of its stores by 10% to 15% annually.
H&M has grown markedly under Mr. Eriksen's nine years at the helm. H&M has more than 73,000 employees and 1,800 stores in 34 countries.
Also under his leadership, H&M began teaming up with famous designers to create and market fashion collections.
Credit: By Ola Kinnander
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