Swedish retailer H&M reported a fall in net profit due to investment in expansion and weak sales.

Net income for the first quarter was down 10 per cent to 2.46 billion kronor (US$380 million). Sales increased by just two per cent excluding value added tax.

“The first quarter has been characterised by the continued challenging situation for the fashion retail industry in many of our markets mainly due to a continued tough macro-economic climate, but also due to unfavourable weather during parts of the quarter. This meant that sales in the first quarter did not reach our expectations,” said CEO Karl-Johan Persson.

Despite the profit fall, H&M will ramp up the rate of expansion to approximately 350 new stores compared to the originally planned 325. This year will see the retailer entering new markets such as Chile, Estonia, Lithuania, Serbia and Indonesia.

“We are also preparing to open in other countries in 2014, such as Australia,” said Persson.