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H&M Third-Quarter Profit Misses Expectations

Swedish fashion giant Hennes & Mauritz posted below-consensus third-quarter pretax profit on Wednesday due to weaker revenues than expected, but the company said sales in the fourth quarter had developed well.

H&M, which turned 60 years old this year, reported a 17% rise in pretax profit to 4.4 billion crowns ($674 million) in the third quarter against anpalysts' average forecast of 4.6 billion in a Reuters poll.

H&M earned 3.8 billion in the same period the previous year.

August sales rose 11%, while like-for-like sales -- measuring stores open at least a year -- fell 1%.

Analysts had seen August's sales up 11.9% on average with like-for-like sales flat.

The underwear-to-suits maker also said it would delay the launch of its H&M Home venture to autumn 2008 as it needed more time to develop the concept.

On the positive side, the firm's gross margin -- a key measure of cost control -- was 61.2%against analysts' expectations of 60.6% and 59.2% in the third quarter last year.

The company said in a statement this was due to "a more efficient buying process, a favourable U.S. dollar exchange rate and a lower proportion of price reductions."

While sales in August disappointed, September -- the first month of H&M's fourth quarter -- looks like being strong.

Weather in Sweden has been mild and figures from Textilwirtschaft in Germany -- H&M's biggest market -- show clothing sales across the market rising by around 20% year-on-year in each of the first three weeks of the month.

"The autumn collections have been well received," the company said. "After a weaker August, sales have been very satisfying so far in September."