By Editor,Emily Hawkins

Copyright dailymail

H&M shares soared on Thursday as investors hailed signs the retailer’s turnaround efforts started paying off over summer.

The world’s second largest fashion retailer said sales and profits grew over the three months to the end of August.

Sales rose 2 per cent to £4.51billion despite fierce competition from both fashion number one Inditex, which owns Zara and Pull&Bear, and Chinese online rival Shein.

It has also faced rivalry on the UK High Street as a revival at department store Marks & Spencer picks up momentum with younger shoppers.

H&M chief executive Daniel Erver, who has been attempting to revive the Swedish firm since February 2024, said it was ‘taking further steps in the right direction’.

He added: ‘The increase in profit shows that we are on the right track as a result of the progress we have made in our plan.

‘In an environment of ongoing uncertainty with cautious consumers, all of us within the H&M group are consistently focusing on our customer offering – always giving the best value for money.’

Shares were up 8.75 per cent on the Stockholm stock market this afternoon.

Cost-cutting, including 135 store closures over the past nine months, helped profits at the group rise 39pc to £390m compared to £280m last year. Closures included 21 shops in Western Europe.

Russ Mould, investment director at AJ Bell, said: ‘H&M is on the comeback trail. It is making progress in a difficult retail environment, fighting off competition and upping its game with designs that encourage shoppers to keep coming back for more.’

The emergence of cut-price retailer Shein had forced the chain to rethink on positioning, Mould said.

‘It either had to go head-to-head with the discounters or reposition itself as a place to buy better quality items still at affordable prices but not rock-bottom ones. H&M is going down the latter path, offering trendier clothes and early evidence suggests the strategy is working,’ he added.

Earlier this month, H&M’s London fashion week show featured models including Alex Iris Law and Lila Moss.