H&M’s global profits plummeted by 30% in its first quarter as cotton prices soar.

The Swedish fashion giant’s profits were down to £259m in the 13 weeks to February 28 from £370m in 2010.

Despite the drop in profits, H&M’s global sales slipped only 1.3% to £2.42bn, with like-for-likes up 1%. Chief executive of the Swedish fashion giant Karl-Johan Persson said negative currency effects and rising production costs had eroded profits as the retailer absorbed higher cotton prices.

He said: “Instead of passing on these cost increases to customers, we chose to strengthen our price position in order to build further on our strong market position for the long term.”

H&M’s UK operation had outperformed the group with sales soaring 14% in local currency to £191.7m during its first quarter.

The fashion retailer said it was looking to expand in its current financial year with the UK pinpointed as one of its targets for the largest expansion. It plans to open 97 stores worldwide during its second quarter alone.

It plans to enter new countries such as Croatia, Singapore, Morocco and Jordan this year.