Swedish young fashion chain Hennes & Mauritz (H&M) has reported that net profits fell 15% for the three months ending August 31.

The fast fashion retailer said that net income fell to SEK3.59bn (£359.6m) down from SEK4.24bn (£471.5m) during the same period the previous year.

H&M said that economic uncertainty and poor weather kept customers away from stores in some key markets during the period which in turn prompted intense promotional activity seen across all of the fast fashion sector.

Gross margins fell to 58.6% in the third quarter, down from 60.5% at the same time last year, due to higher purchasing costs caused by a variety of factors, including high cotton prices.

“H&M continues to gain market share in a challenging environment for the fashion retail industry,” said chief executive Karl-Johan Persson. “We have a strong business concept, a strong financial position and we are continuing to grow with high profitability. We are increasing our expansion for full-year 2011 to approximately 265 stores new stores net, from the original planned 250.”