Source: Sharecast
The Swedish retailer, which owns Monki, & Other Stories and Cos as well as the flagship H&M brand, said net sales in the three months to 31 August were SEK59bn (£4.4bn), down on last year’s SEK60.9bn.
In local currencies, net sales were flat.
Operating profits fell 26% to SEK3.5bn, while the operating margin softened to 5.9% from 7.8%.
As at 0915 BST, shares in the retailer were down 4%
Recently-installed chief executive Daniel Erver said: "Despites a challenging start, we are concluding the third quarter with sales on par with last year in local currencies, and with good cost control.
"We are strengthening the H&M brand by investing in products, the shopping experience and marketing, which we are already seeing start to make an impact and which will contribute to increased sales and profitability."
Looking to the final quarter, H&M said the autumn collection had been well received and sales in September are now expected to be up 11% year-on-year. However, the retailer still trimmed guidance for the full year, with the annual operating margin now anticipated to be lower that 10%.
"External factors have impacted our sales revenue and purchasing costs by more than we expected," Erver said.
In June, H&M was targeting a full-year margin of 10%, although it acknowledged at the time that the conditions needed to achieve that had become more challenging.
In the nine months to August end, the operating margin was 7.4%.
Fashion retailers have been hit by higher costs, weak consumer confidence, poor weather and stiff competition from online rivals such as Shein.
Jefferies said: "Soon enough the debate will start shifting onto the year ahead, but it will be overall autumn/winter delivery that will provide clearer answers as to whether the step up in opex investment will generate the required sales payback to fuel appreciable margin rebuild."
