H&M sales fall less than feared as ASOS eyes abroad

By James Davey and Adam Cox

LONDON/STOCKHOLM (Reuters) - Swedish fashion group Hennes & Mauritz posted a shallower-than-expected fall in October underlying sales on Monday, raising hopes its focus on low-cost clothing would shield it from a consumer downturn.

H&M, Europe's second-biggest clothing retailer behind Spain's Inditex, said sales at stores open at least a year fell 2 percent in October compared with the same time last year, the third consecutive monthly decline.

The average forecast in a Reuters poll of 10 analysts was for a 2.8 percent drop, with estimates ranging from a 5 percent fall to a 2 percent rise.

H&M's sales update came as small but fast-growing online fashion firm ASOS said it was defying the consumer downturn and planning to expand abroad.

ASOS, which posted a 68 percent rise in first-half profit, said Finance Director Jon Kamaluddin would become its international director and it planned to launch local language websites, though it didn't say where or when.

At 9:25 a.m. British time, H&M shares were up 3.6 percent at 262 Swedish crowns, outperforming a 0.3 percent fall on the DJ Stoxx European retail index. ASOS was up 7 percent at 275 pence.

Consumers across the world are curbing spending following steep rises in food and energy costs and after a crisis in financial markets has plunged large parts of the developed world into recession. U.S. retail sales fell a record 2.8 percent in October.

"We would not expect huge changes to profit forecasts for the current year with one month to go," Credit Suisse analysts said of the H&M sales update.