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A paper bag from retailer H&M.

Fernando Morales/The Globe and Mail

Hennes & Mauritz AB, the Swedish budget fashion retailer, has delayed the launch of its online shop in the U.S. as results fell short of analyst expectations.

Internet retailing there will now start in the middle of next year - nine months later than planned - as H&M grapples with the challenges of selling online. It is also rushing to launch mobile sites in the eight countries where it has online operations.

In the third quarter to the end of August, H&M's pre-tax profit was flat compared with a year earlier at 4.9-billion Swedish krona ($740-million U.S.). Analysts surveyed by Reuters had expected 5.37-billion Swedish krona but H&M said the strong krona had taken its toll.

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H&M has struggled to match the financial performance of rival Inditex ever since the Spanish owner of Zara last year overtook the Swedish group as the world's largest fashion retailer.

H&M blamed a heatwave in many European countries in August for weak sales that month while analysts said Inditex's flexible production - which means it can take just two weeks from designing a garment to selling it - had allowed it to react quicker to the weather.

Sales rose 7 per cent in the third quarter to 28.8-billion Swedish krona against expectations of a double-digit increase.

H&M will open 300 stores this year compared with a previous plan of 275 as the purveyor of cheap chic moves into new markets such as Latvia and Malaysia with Lithuania and Chile to follow in 2013.

H&M also provided more details about its new line, & Other Stories, the latest in a series of separate brands it has launched in recent years. The label will be in shops in early 2013 and will focus on women's fashion through a range of accessories such as bags, shoes, beauty products and lingerie, as well as clothes. It follows the launch of brands such as Monki, Weekday and Cheap Monday, which aim to explore fashion niches away from the main H&M brand.

Pre-tax profits for the first nine months increased 11 per cent to 15.65-billion Swedish krona on sales up 12 per cent to 88-billion Swedish krona compared with the same period a year ago.

Karl-Johan Persson, chief executive, said: "Conditions in the fashion retail industry continued to be challenging in many markets - both as regards the weather and the macroeconomic climate."

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