H&M Q4 pretax lags consensus, says markets challenging

Hennes & Mauritz (HMb.ST), the world's second-largest fashion retailer, posted a surprise drop in fourth-quarter pretax profit and said market conditions were challenging.

Pretax profit at the Swedish budget apparel firm was 6.80 billion Swedish crowns ($997.2 million), down from 7.18 billion a year earlier and lagging a mean forecast in a Reuters poll for no change from a year earlier.

The gross margin shrank to 61.9 percent from a year-earlier 63.2 percent, the company reported, against a forecast for 62.5 percent.

($1 = 6.8194 Swedish crowns)