H&M January same-store sales rise 3 pct

STOCKHOLM - World no.2 fashion retailer Hennes & Mauritz said on Wednesday sales at its established stores grew in January for a second consecutive month, by 3 percent in local currencies.

The budget clothing firm and rivals such as Zara owner Inditex have had to slash prices to shift a build-up of stock caused by unusually mild weather and a squeeze on consumer spending in recent months.

"It has been a time of great uncertainty on the different markets. We see that sales in January are still okay, probably based on heavy discounting, but still a good development," Sydbank analyst Nicolaj Jeppesen said.

"We saw Gap delivering negative same-store sales growth for January, so compared to competitors, H&M is still doing all right," he said.

U.S. fashion retailer GAP's like-for-like sales shrank 4 percent in January.

Analysts polled by Reuters had on average expected H&M, which makes the bulk of sales in Europe, to increase like-for-like sales by 2.5 percent.

H&M's total January turnover, including stores opened in the past year, rose 12 percent in local currencies, matching a preliminary figure.

H&M last month said markdowns would be large in the current quarter and it was braced for tough times in many markets this year, as it posted a surprise fifth straight drop in quarterly profit, for the September-November period.

Shares in H&M, with around 2,500 stores in 43 countries, was up 0.6 percent in early trading, roughly in line with the STOXX Europe 600 retail index. (Reporting by Anna Ringstrom; Editing by Erica Billingham)