H&M, the world's second-biggest fashion retailer, reported on Thursday a surprise operating profit for the December-February period, despite weak demand as consumers curtailed spending amid soaring inflation.
Operating profit in the Swedish group's fiscal first quarter was 725 million Swedish crowns ($69.73 million) against a profit of 458 million a year earlier and a mean forecast of 1.10 billion loss in a Refinitiv poll of analysts.
The company said consolidating the earnings of its Sellpy second-hand platform had boosted earnings by about 1 billion crowns.
While H&M showed signs of bringing its costs under control, it still struggled to compete with major rival Inditex, owner of Zara and other brands, as well as rapidly expanding fast fashion online retailers such as SHEIN and Temu.
"The external factors that influence purchasing costs continue to improve, work on the cost and efficiency program is proceeding at full speed, and many of the changes that we have made in recent years are starting to have an effect," Chief Executive Helena Helmersson said in a statement.
H&M's first quarter revenue, published separately on March 14, was worse than feared as the small increase in sales missed most estimates, analysts said at the time.
As Inditex lured customers back to in-person shopping after the pandemic, H&M's more cost-conscious base has been reluctant as inflation eats into purchasing power, while SHEIN and Temu won success online with cut-price items such as $10 dresses.