Swedish budget fashion retailer H&M reported an 8 percent increase in sales in January, the figure falling slightly short of a preliminary reading.

H&M, the world's second-biggest clothing firm after Zara owner Inditex, is targeting annual local-currency sales growth of 10-15 percent and has said it expects to be within that range from this year on.

 

The earlier flash reading for January, the second month of H&M's fiscal third quarter, was 11 percent and included a negative calendar effect of 2-percentage points.

"It's a little surprising that January sales growth has come in 1 percentage point below this level," said Societe Generale analyst Anne Critchlow, adding that such a variance between H&M's preliminary and final figure was not without precedent.

In December the equivalent sales growth figure was 6 percent, while in January 2016 it was 7 percent.

H&M, which saw sales growth slow and profits fall last year, is branching out into more brands to reach more customers and investing heavily to speed up supply and improve its online range in response to tougher competition in its budget segment and from online-only players.

H&M's shares were down 0.3 percent at 0835 GMT (3:35 a.m. ET), lagging the broader market in Stockholm .OMXSPI and the European retail index .SXRP, and taking a 12-months drop to 11 percent.

H&M said it had 4,380 stores as of the end of January, up 11 percent from a year ago. The company recently replaced a long-standing 10-15 percent annual store growth target with the turnover target to reflect growing e-commerce.