Swedish fashion giant H&M posted a steeper-than-expected fall in quarterly profit on Wednesday, citing currency headwinds and a challenging retail climate but said June sales were "off to a good start."

The brand, known for cheap and cheerful fashion clothing for young women, is in neck-and-neck global competition with Spanish group Zara.

Net profit in the March to May period dipped 11 percent to 4.655 billion kronor ($726 million), marking the third quarterly earnings decline in a row and missing a 4.88-billion-kronor consensus by analysts polled by Dow Jones Newswires.

Spring sales rose 5 percent in local currencies but revenue was flat at 31.6 billion kronor due to a negative impact from exchange rates.

"Overall sales were not satisfactory mainly due to the continued challenging situation for the fashion retail industry as well as unfavourable weather," Chief Executive Karl-Johan Persson said in a statement.

An unusually harsh winter in much of Europe and North America meant H&M had to offer bigger discounts than planned on many of its products.

AFP