H&M Hennes and Mauritz AB’s slowing sales growth unnerved investors in Europe’s second largest clothing retailer, sending its shares lower even as its first-quarter profit for 2015 beat estimates.

Revenue in the first three weeks of March rose 9 per cent in local currency terms, the company said, slowing from 15 per cent growth in February. This means the company is headed for the weakest monthly performance since September.

Anne Critchlow, an analyst at Société Générale, said that the slowdown may be weather-related and implies unchanged same-store sales.

H&M’s revenue growth has been below 10 per cent in only one of the past 17 months.

“Often following a strong month, there is something of a hangover month, as appears to be [the case] in March,” Richard Chamberlain, an analyst at RBC Capital Markets, said.

H&M fell by as much as 3.1 per cent in Stockholm trading, reversing an initial gain of as much as 2.2 per cent. The stock was down 2.6 per cent at 344.20 kronor at 1.25 pm (about €37).

“It’s been a slow market,” chief executive Karl- Johan Persson said of March in an interview at H&M’s headquarters.

“But it’s just three weeks and one should view March, April and May together, it usually evens out.”

Second-quarter

The slow start to the second-quarter is weighing on the shares, as well as increasing cost pressure caused by the strength of the dollar, Jamie Merriman, an analyst at Sanford C Bernstein, said.

H&M is battling the strength of the dollar, which it has said will add to purchasing costs this year, particularly in the second half.

H&M is investing in online sales and new markets while broadening its range with an extended offering of sportswear, shoes and beauty products.

The vendor opened its first store in Taiwan in February and will expand to Peru, Macau, South Africa and India later in the year.

Bloomberg