H&M's profits have fallen, however the drop is less than expected.

H&M said conditions remained tough in European markets, with rapidly changing shopping behaviour and expectations.

"To meet the rapid change that is going on in fashion retail we need to be even faster and more flexible in our work processes, for example as regards buying and allocation of our assortment," Chief Executive Karl-Johan Persson told The Mail Online.

H&M said local-currency sales in the first 28 days of March were up seven per cent.

H&M also said it would be launching a new brand, which is slightly more upmarket, to reach a broader customer base and to decrease exposure to the increasingly crowded budget segment.

Its new separate chain of stores will have a slightly higher price range than its core budget H&M brand.

H&M will look to launch new stores in the second half of the year.

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