(Bloomberg) -- Hennes & Mauritz AB posted weaker-than-expected profit in its first quarter, hit by the strengthening of the Swedish krona and an increased discounting of its clothes. Shares tumbled.

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The fast retailer’s operating profit of 1.2 billion Swedish kronor ($120 million) in the three months to Feb. 28 was much lower than the 1.9 billion kronor analysts had expected. The trend is continuing in the current quarter, with the company weighed down by excess stock levels and higher purchasing costs. Net sales reached 55.3 billion, below the 55.8 billion kronor analysts had expected.

Although H&M is making “important progress” in its turnaround, sales and earnings in the quarter were “somewhat weaker than planned,” the company said Thursday.

Chief Executive Officer Daniel Erver, a company-veteran who took the top job in January last year, has struggled to revive top-line growth and rebuild faith in the Swedish retailer’s midterm growth target for earnings before interest and taxes of 10%. The latest quarter shows that his efforts to claw out of the company’s troubles through higher marketing spending has not brought the sustainable sales boost analysts had hoped for.

H&M shares fell as much as 5.1% in early trading in Stockholm, the biggest intraday drop since March 12.

The weaker results at H&M came as Next Plc raised its profit guidance for the current fiscal year on Thursday, after topping £1 billion of profit last year. The UK clothing and homewares retailer said the company is growing on many fronts, with sales at home and overseas rising and its Total Platform, where it sells third-party brands online, also showing good growth. Next shares rose as much as 9% in early trading in London.

Earlier this month, rival Inditex — the owner of sector-darling Zara — reported a disappointing start to the year, feeling the impact of cuts in consumer spending amid a slowdown in large parts of the global economy. The world’s largest listed clothing retailer saw its share plunge on the report.

H&M, controlled by Sweden’s Persson family, said its preliminary sales figure for March shows an increase of 1% in local currencies compared to the same month the previous year.

The company said the negative effect of external factors, increased markdowns and investments in customer offerings is estimated to be significantly smaller in the second quarter than in the first.

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