H&M Q4 beats forecast

H&M, which faces stiff competition from rivals such as GAP and Inditex , has weathered the economic downturn better than many rivals, thanks to its geographic spread and low-priced profile.

After undershooting sales forecasts for the last three months of its fiscal year, which runs to the end of November, the company turned a corner in December with a 3-percent rise in same-store sales, versus a 1.1 percent fall seen in a Reuters poll.

That was the first positive result for same-store sales since April of 2009, and the strong momentum seemed to carry over to January when total sales increased by 13 percent compared to the same period last year.

H&M, which recently teamed up with French designer Sonia Rykiel to launch a line of fashionable lingerie, posted fourth-quarter pretax profit of 7.99 billion Swedish crowns (740 million pounds), beating an expected 6.97 billion crowns in a Reuters poll of 25 analysts.

While annual sales suffered from the gloomy mood among consumers, notably in Europe, the latest monthly figures may show that H&M could be starting to reap the benefits of its vast network of outlets and new investments in Asia.

Retailers are still suffering from weak consumer spending and sales, despite a nascent economic recovery. Retail sales data in Europe showed a larger-than-expected fall in November, though some surveys hint that consumer confidence is improving.

Inditex, Europe's biggest clothing retailer and owner of Zara, beat nine-month net profit forecasts when it reported earnings in December and said sales had picked up heading into the key Christmas period.

(Reporting by Nick Vinocur; Editing by Rupert Winchester)