Q1 localcurrency sales lighter than consensus estimates
Analysts sees profit loss in Q1 and cost pressure to continue
Rival Inditex had a 13.5 increase in sales

STOCKHOLM, March 15 Reuters HM, the world39;s secondbiggest fashion retailer, reported on Wednesday a smallerthanexpected increase in sales in the latest sign it is struggling to compete with Zaraowner Inditex.

Shares in HM were down 6 in early trade, underperforming the wider Swedish market.

The Swedish group said sales measured in local currencies for the period, its fiscal first quarter, rose 3 from a year earlier.

Jefferies said localcurrency sales, the figures most watched by markets, were significantly lighter than consensus estimates and implied that sales in reality fell 3 in February.

The broker called the results worse than feared and that it expected a loss in earnings before interest and taxes EBIT when the group reports its full first quarter results on March 31.

Credit Suisse also predicted a material operating loss.

HM, which is in the middle of a programme to reduce staff and cut other costs, said net sales were up 12 from a year earlier to 54.9 billion crowns 5.26 billion.

By contrast, market leader Inditex reported on Wednesday a 13.5 increase in Feb. 1 March 13 sales and a 27 net profit increase for its fiscal year through January.

Budget player HM39;s profits fell last year as it did not fully pass on soaring raw material, freight and energy costs in an attempt to retain its…