Swedish fashion retailer Kappahl has reported operating profit of SEK119m (US$18.3m) for the company's fiscal fourth quarter, beating analysts' estimates.

Kappahl, which was this week trumped in its bid to acquire rival retailer Lindex, reported net sales for the period, excluding VAT, of SEK1,090m, an increase of 7.9%.

The company's gross margin was 62.2% and its operating margin was 16,8%.

Christian W Jansson, Kappahl's president and CEO, said: "Once again, we can present both the best quarter and the best year ever.

"Our marketing campaign, focused around the concept You Look Great, has contributed to a positive sales development, with an increase for comparable stores slightly above the goals we set at the beginning of the year.

"We are very proud of the near 8% growth recorded for the quarter but most proud of the fact that customers appreciate our fashion.

"We also have one of the industry's best gross margins and have improved this further. Our clear focus on continuous cost controls has contributed to our ability to keep cost increases on a lower level than sales growth. Taken together, this has contributed to further improved profits and the best fourth quarter ever."

Earlier in the week Swedish fashion chain Lindex recommended an improved takeover offer from department store operator Stockmann, having last month urged shareholders to reject a SEK102 per share bid tabled by Kappahl.