H&M has recorded a 20 per cent fall in its third quarter profit, despite a rise in sales, as summer discounting hit its bottom line.

Net profit at the fashion retailer for the three months to August 31 came in at £351 million, which the company said had been affected by slashed prices as it tried to shift stock, as reported by Retail Gazette .

Pre-tax profit at H&M, which has stores in Gloucester and Cheltenham, also fell 20 per cent in the same period, down to £460 million, just short of the 21 per cent fall predicted by analysts.

In the first nine months of the year, H&M's group sales rose seven per cent to £15.9 billion worldwide, well below the company's annual target of 10-15 per cent.

The company said its online sales continue to do very well, but they weren't compensating sufficiently for the fall in footfall in its stores. It said the fashion market is changing quickly, with new companies coming into the marketplace and customers' expectations and behaviour changing.