• FY net profit up 7% to SEK16.9bn (US$2.7bn)
  • Net sales up 10% to SEK120.8bn
  • FY comps up 1%; Q4 flat

Fashion retail giant H&M has boosted its full-year profits by 7%, thanks to a double-digit sales increase and positive comparable store sales.

In a year when the company opened more than 300 new stores, with China and the US the biggest expansion markets, margins narrowed slightly but the business increased its market share.

Fourth quarter net profit was down slightly, despite a 5% increase in sales and static comparable store sales.

H&M said sales in January were expected to increase by 5%, with bad weather affecting the second half of the month in some markets.

The company plans to add 325 new stores this year, making its debut in markets such as Chile, Estonia, Lithuania, Serbia and - through a franchise agreement - Indonesia.

"H&M continues to stand strong in a challenging clothing market which in many countries has been even more challenging in 2012 compared to 2011," said Karl-Johan Persson, company CEO.

"The fact that we increased sales by 11% in local currencies and 1% in comparable units whilst continuing to gain market share proves once again that customers appreciate our collections."

Analyst Richard Chamberlain, of Bank of America Merrill Lynch, highlighted the "pent-up demand" for H&M's US e-commerce business, which is due to launch in 2013.

He added: "Although there is a risk that H&M has to make higher than expected further investments in its offer, gross margin should benefit from lower raw material costs in H1 and from the recent strength in the euro vs the US dollar in H2."