STOCKHOLM Budget clothing retailer Hennes & Mauritz (HMb.ST) posted a smaller than expected drop in like-for-like November sales, easing fears of large markdowns to reduce unsold stock amid weak demand in key markets.
The Swedish company said on Monday that local-currency sales at stores open a year or more shrank 1 percent in the last month of its fiscal year, beating a Reuters poll forecast for a 3 percent drop.
That was the second consecutive monthly drop, after a 5 percent dip in October.
November's total sales including new stores were up 7 percent from a year earlier in local currencies, just above the average forecast.
An analyst who declined to be named said that there had been some concern because industry data showed that clothing sales in Germany, H&M's single biggest market, were down 5 percent in November.
"This may soothe concerns over promotions next quarter, although it is still a tough market out there," the analyst said.
H&M, the world's second-biggest clothing retailer behind Zara owner Inditex (ITX.MC), has the bulk of its business in Europe, where a sovereign debt crisis and austerity measures have dampened demand.
Turnover in the full September-November quarter, which H&M published alongside the monthly figures ahead of the full-year earnings report in January, grew 5 percent from a year earlier to 32.5 billion Swedish crowns (3 billion pounds), matching expectations.
In the full fiscal year, like-for-like sales were down 1 percent.
H&M did not comment on the sales figures.
(Reporting by Anna Ringstrom; Editing by David Goodman)