H&M plans to expand in China and US as sales take a tumble

The Swedish fashion giant H&M has posted a rise in annual profits but took a hit to its bottom line in the fourth quarter and has suffered falling underlying sales since the start of December.

The world's second-biggest fashion retailer after Zara-owned Inditex also said it plans to add 325 stores in 2013, with its biggest expansion in China and the US.

H&M, with 2,800 stores in 48 countries, grew its profit after tax by 7 per cent to Swedish kronor 22.29bn (£2.21bn) over the year to 30 November but provided no detail about its UK performance. Its chief executive, Karl-Johan Persson, said: "H&M continues to stand strong in a challenging clothing market." Its profits fell by 2 per cent to 6.64bn kronor in its fourth quarter. Since then like-for-like sales fell by 2 per cent in December and 5 per cent in January, analysts estimated.