H&M has reported a 10 per cent increase in group net sales and a smaller than expected decline in pre-tax profits for the first quarter, as it reaps the rewards of an omnichannel transformation plan.

The Swedish fashion retailer reported that pre-tax profit was down to SEK 1.04 billion (£85 million) in the three months to March, from SEK 1.26 billion for (£104 billion) the same period last year.

Meanwhile, gross margins were up to 50 per cent, from 49.9 per for the first quarter of 2018.

Combined online and physical store sales in the UK were up by eight per cent, compared to the the first quarter of 2018.

The retailer also said that net sales in the period 1 March to 27 March 2019 were up seven per cent in local currencies.

Chief executive Karl-Johan Persson said the improvements were due to the group’s “ongoing transformation work” and hailed progress in combining online and offline sales channels.

He added that all markets were now on the company’s new online retail platform, following the transition of the German website, which he said was in part responsible for the drop in pre-tax profit for the quarter, along with as continued costs relating to implemented and upcoming transitions to new logistics systems.

“This is having a negative effect on our margin in the short term but, will have a positive effect in the longer term as it will result in a faster, more flexible and more efficient product flow,” Persson said.

As part of the wider digital expansion, H&M said it was launching online operations in Mexico and Egypt, as well as on Myntra and Jabong, the largest e-commerce marketplaces in India.

It also said it would continue to invest in “robust scalable platforms that enable faster development of various customer apps and new technologies”.

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