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The decline, which also strips out currency fluctuations, compares with year-over-year drops of 5% and 9% for June and May, respectively, said H&M, the world's third-largest fashion chain by revenue behind U.S.-based Gap Inc. and Spain's Inditex SA. Total sales, which include sales in new stores, rose 7%, compared with a 4% increase in June and flat sales in May.

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STOCKHOLM -- Hennes & Mauritz AB on Monday said sales at stores open at least a year fell 3% in July as it continued to suffer from a consumer spending slowdown.

The decline, which also strips out currency fluctuations, compares with year-over-year drops of 5% and 9% for June and May, respectively, said H&M, the world's third-largest fashion chain by revenue behind U.S.-based Gap Inc. and Spain's Inditex SA.

Total sales, which include sales in new stores, rose 7%, compared with a 4% increase in June and flat sales in May. H&M reports only percentage changes for its monthly sales.

"The negative trend continues," said Erik Sandstedt, a Stockholm-based analyst at Alandsbanken, noting that July marked the 11th time in the past 12 months that H&M reported a drop in comparable sales.

The July sales figures "were a little disappointing," said Mr. Sandstedt, partly because of recent positive sales statistics for the clothing market in Germany and Sweden. In Sweden, H&M's home market and fifth-biggest source of revenue, clothing sales for the industry rose 11% in July, according to the Swedish Retail Institute.

In Germany -- H&M's biggest market, generating about a quarter of its revenue -- overall clothing sales were up 2% for July, according to industry journal Textilwirtschaft.

"At the same time, one has to put this into perspective," said Mr. Sandstedt. "There are companies that report double-digit drops in comparable sales, so considering that, [H&M's numbers are] no catastrophe."

Many clothing stores have offered large discounts lately, putting pressure on H&M, said Mr. Sandstedt. However, the retailer has repeatedly said that it is winning market share and that the downturn has made it easier to secure attractive store locations. In the U.K., for instance, H&M has taken over a handful of stores from insolvent retailer Woolworths Group PLC. At the end of July, H&M had 1,828 stores, up 13% from 1,601 stores a year earlier.

Credit: By Ola Kinnander