H&M's profits fell 20 per cent in the third quarter of 2018, despite the Swedish brand recording a 9 per cent increase in sales, helped by a 32 per cent rise in online sales.
H&M has invested heavily in making its online and in-store offerings more seamless, in an effort to compete with online retailers likeAsos and Zaland.
The group has seen profits shrink and struggled to shift stock in recent years due to competition from both those brands, as well as high-street rivals such as Primark.
However, the company reassured investors on Thursday that it would not need to cut costs to move unsold clothing in spite of the quarterly dip in profit.
The fashion company's CEO, Karl-Johan Persson, said: “The rapid changes in the fashion industry are continuing and the H&M group is in an exciting transitional period.
Our transformation work has contributed to a gradual improvement in sales development with increased market share in most markets during the third quarter, particularly in Germany, Sweden, Eastern Europe, Russia and China.
“In the US, France, Italy and Belgium, however, store sales were negatively impacted by the problems that arose when we introduced new logistics systems in these markets.
The new logistics systems are an essential part of our work to make our supply chain faster, more flexible and more efficient, and to continue the integration of stores and online.”
As of May this year, H&M had 4,801 stores in 69 countries and is looking to expand its reach even further.