HENNES & MAURITZ reported pre-tax profits had jumped nearly a quarter in the past three months as its newest collections had been well received despite tough economic conditions.

The Stockholm-based fashion retailer also said the effects of the higher cotton prices, which have plagued HM for the past few quarters and eaten away at margins, had been “more or less neutralised”.

This helped the group to report a forecast-beating 23 per cent rise in pre-tax profits to 7.1 billion Swedish kroner. Earnings per share rose 22.6 per cent to Skr3.15.

The results were a steep change from the first quarter when HM, reported a drop in margins and worse than expected profits.

This prompted fears that its strategy of shielding consumers from the impact of high cotton prices and rising production costs in Asia in an attempt to drive sales, when competitors have been passing these costs on, was not bearing fruit. But second-quarter figures show gross sales including value added tax rose 14 per cent to Skr36.9 billion and like-for-like sales up 2 per cent.