STOCKHOLM H&M cast doubt over its full-year profit margin target on Thursday after the world's number two listed fashion retailer missed quarterly earnings forecasts and predicted a drop in June sales.

The Swedish company said sales this month were likely to fall 6% in local currencies against the same period last year, partly due to poor weather in many key markets.

Chief executive Daniel Erver said the group still believed in its 10% operating margin goal for 2024 but that this had got harder to reach.

"External factors that influence our purchasing costs and sales revenues, including materials and foreign currency, will have a more negative impact than we expected in the second half of the year," he said.

"The most important prerequisite for achieving our goal is that sales growth is further strengthened in the second half of the year compared with the second quarter increase," he added.

H&M has often fallen short of Zara owner Inditex, while China-founded fast-fashion group Shein is also expanding rapidly in Europe and plans a London stock market listing.

The Swedish group has struggled to win back customers, with its core of cost-conscious shoppers reluctant to spend as inflation ate into purchasing power.

H&M said net sales in its March-May second quarter rose 3% in local currencies on the same period last year, with growth in all customer groups and a positive trend in all regions.

Operating profit was 7.1 billion Swedish crowns (US$672.5 million or RM3.2 billion), up from 4.74 billion a year earlier but below a mean forecast of 7.37 billion in an LSEG poll of analysts.

  - Reuters