Swedish cheap-and-chic fashion giant H&M yesterday posted a net profit up 22.5 per cent in the second quarter, easily beating expectations and boosting its share price.

For the March-May quarter, H&M posted a net profit of 5.22 billion kronor (€590 million) well above the expectations of analysts polled by the Dow Jones Newswires, who had anticipated a net profit of 4.84 billion kronor for the quarter.

Following the news, the company saw its share price leap 2.5 per cent in early morning trading on a Stockholm stock exchange up 0.2 per cent.

H&M also saw its sales, excluding VAT, jump 15 per cent in the second quarter, to 31.66 billion kronor from 27.63 billion during the same period a year earlier, the company said in its earnings report.

“The spring collections have been well received by our customers as shown by our increased market share in a fashion retail market that continues to be challenging,” company chief executive Karl-Johan Persson said in the statement.

The company, which in recent quarters had posted disappointing results due to high purchasing costs, said yesterday that “overall, the effects of the earlier significantly negative external factors, such as the cotton price, were more or less neutralised.”

H&M, which had seen its gross margin shrink in the first quarter, posted a stable margin in the second quarter of 61.7 per cent, which was good news, analysts said.

H&M said it was continuing to expand rapidly, with plans to open 275 new stores during the full year 2012, including in five new markets: Bulgaria, Mexico, Latvia, Malaysia and Thailand.

The company counted 2,575 stores worldwide at the end of May, and said “China, the US and the UK are expected to be the largest expansion markets for H&M in 2012.”