H&M Q1 profit below forecast, March sales rise 12 pct

STOCKHOLM, March 27 Thu Mar 27, 2014 3:15am EDT

STOCKHOLM, March 27 (Reuters) - Hennes & Mauritz, the world's second biggest fashion retailer, reported worse-than-expected first-quarter profits but said sales had gotten off to a good start this year despite a tough economic situation in many of its markets.

The Swedish budget fashion retailer posted a pre-tax profit of 3.5 billion Swedish crowns ($542 million), short of average analyst forecasts for 3.8 billion. The gross margin came in at 54.9 percent, below a forecast 55.3 percent and from 60.8 percent in the previous quarter.

H&M, which had already reported quarterly sales, said sales rose by 12 percent during most of March in local currencies after rising 11 percent in February.

"Sales have got off to a good start with an increase of 12 percent in local currencies in the first quarter in a fashion retail market that in many places is still characterised by a challenging macroeconomic situation, and we have continued to gain market share," Chief Executive Karl-Johan Persson said in a statement.

H&M also said it plans to roll out online services in Spain, Italy and China after launching in France this month.

($1 = 6.4585 Swedish Crowns) (Reporting by Mia Shanley and Helena Soderpalm)

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