HIGH-street fashion chain H&M revealed slowing sales in the UK and Europe as it battles against “challenging“ retail conditions.

The Swedish firm said UK sales rose by 7% in local currency in the third quarter in a marked slowdown on the 12% hike seen in the previous quarter.

H&M, which has 217 stores in the UK and more than 2,600 worldwide, saw trading across the group come under pressure due to the eurozone crisis and austerity measures.

Sales were also impacted by a heatwave in many of its key markets last month, according to the firm.

It said group-wide like-for-like sales remained flat in the third quarter to August 31, with total sales increasing 10% in local currencies.

But trading has picked up in September, with group-wide sales up 14% in local currencies so far this month.

Karl-Johan Persson, chief executive of H&M, said: “Conditions for the fashion retail industry continued to be challenging in many markets in the third quarter, both as regards the weather and the macroeconomic climate, with austerity measures and restrained consumption.”

The Stockholm-headquartered group posted broadly flat net profits for the quarter, at £338m, up just under 1% from a year earlier.

It said results were being buffeted by currency effects, while it is also facing cost hikes in areas such as Asia, although cotton prices have eased back.

H&M said it plans to ramp up expansion with aims to add another 300 stores by the end of November, up from the 275 previously planned.

It is focusing expansion efforts on China and the US, but said the UK was among a number of markets with “great opportunities“ for growth.

H&M is also launching a new brand next spring - called & Other Stories - in selected European markets, but said it was too early to confirm where it would open first.