H&M profits hit by rising costs.

Hennes & Mauritz AB reported a 15.3% decline in profit after tax to $2.34 billion for the year ending November 30. Sales increased by 8% in local currencies over the year. Comparable sales were down 1% over the year. In Swedish kroner, sales were up 1.4% to reach $16.27 billion.

CEO Karl-Johan Persson said that the retailer managed to gain market share during what was “ one of the toughest years for a long time for the fashion retail industry in many countries”.

He called the situation in sourcing markets “challenging,” adding that “cost inflation has been high resulting in increased purchasing costs for the fashion retail industry. Despite increased purchasing costs, we chose a strategy of strengthening our customer offering and market position even further relative to competitors. The investments have varied over time and have involved everything from even better prices to even higher quality and more sustainable materials. We are convinced that this will gradually become more evident to customers and will strengthen H&M’s already strong market position even further.”

The retailer also announced plans to open some 275 stores in 2012, with a focus on China, the US, and the UK. It will also enter Bulgaria, Latvia, Malaysia and Thailand. It also plans to open its first Latin American store with its first Mexico store.

The retailer also said it will bring the COS brand to Hong Kong, Italy, Finland and Kuwait.

During the fourth-quarter, profit after tax fell 2.3% to $785,000. Sales including VAT increased by 6% in local currencies over the fourth quarter. In Swedish kronor and excluding VAT, sales rose 4.17% to $4.57 billion. Comparable-store sales decreased 3%.