Mar 24, 10:08 AM EDT

Swedish budget fashion chain H&M increases market share on strong sales, profit growth

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STOCKHOLM (AP) -- Swedish budget fashion chain Hennes & Mauritz AB says its three-month earnings surged 35 percent to 3.6 billion kronor ($420 million) on strong sales as shoppers were attracted by new collections.

The net profit in the period ending Feb. 28 was up from 2.6 billion kronor in the same three months a year earlier. Net sales were 40.2 billion kronor, up 25 percent from 32.1 billion kronor a year earlier, the Stockholm-headquartered company said Tuesday.

CEO Karl-Johan Persson said the "very good start to 2015" was boosted by good collections and strong expansion of its online services and new stores, including in a new market Taiwan, but cautioned that a strong dollar would continue to increase purchasing costs.

The company's stock fell more than 2 percent to 344.20 kronor in afternoon trading in Stockholm.

H&M said it plans to complete a two-year plan to open 400 new stores by the end of this year and enter new online markets in Portugal, Poland, the Czech Republic, Romania, Slovakia, Hungary, Bulgaria and Belgium. It also plans to establish stores in new markets Peru, Macau, South Africa and India by year-end.

Persson said that a highlight of this year will be the opening of H&M's flagship store on Herald Square in New York, which will be one of the group's largest stores in the U.S., which is H&M's second largest market after Germany.

H&M is known for its fashionable, low-price collections for mainstream consumers. It has more than 3,500 stores worldwide and 132,000 employees. Its brands also include the higher-priced COS and urban fashion labels such as Monki, Weekday and Cheap Monday.

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