Cost controls have helped H&M limit a drop in quarterly pretax profit but the fashion chain is increasing investments as it tries to keep pace with its rivals. H&M is investing significantly in the supply chain, such as in new logistics solutions with greater levels of automation, but also in optimising its lead times. H&M has been investing heavily in IT investments to integrate its stores and e-commerce and make its supply chain faster and more flexible.

H&M is the world’s second-biggest fashion company. After years of hectic expansion across the world, the Swedish company’s profitability has faltered. Conditions remain very tough in key European markets and in the United States, with shopping behavior and expectations changing rapidly.

Fast fashion rivals are turning over more new styles each year and helped by having production closer to customers so they can quickly boost supplies of fast-selling items.

The retailer is also branching out into new concepts to reach a broader customer base and reduce exposure to the increasingly crowded budget segment. It announced a new chain of stores, Arket, with a slightly higher price range than its core budget H&M brand.

Large markdowns in stores last year hit sales and highlighted shortcomings in design and supply planning.