Hennes & Mauritz AB sales declined more than expected over the summer as the Swedish retailer fell further behind rival Zara amid a growing cost-of-living crisis across Europe.

Revenue dropped 4 percent excluding currency shifts in the three months through August, the Swedish retailer said Thursday. Analysts had expected a decline of 1.4 percent. That’s the first retreat in six quarters.

Zara-owner Inditex SA on Wednesday reported a 25 percent jump in sales for the first half and a higher profit than expected after increasing prices. H&M has said it seeks to strengthen its market position by not raising prices as much as competitors.

The company, one of the world’s biggest fashion retailers, had almost recovered from the Covid 19 pandemic when Russia invaded Ukraine, and is now struggling with soaring inflation and a more pessimistic outlook for the broader economy. In June, H&M said it would take a financial hit of 2 billion kronor ($190 million) for closing its shops and exiting Russia.

Sales gradually improved during the quarter because of higher interest in its autumn collections, H&M said. Total revenue was 57.45 billion kronor.

The shares swung between gains and losses in early trading in Stockholm Thursday. The stock has lost more than a third of its value this year and currently trades near its coronavirus-related lows of the spring 2020. That’s when the firm had as much as 80 percent of its store network closed.

By Anton Wilen

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Inditex’s First Half Sales Surge Ahead of Potential Slowdown

In the first set of results since its founder’s daughter, Marta Ortega, took over as new non-executive chairman, the company said revenue for the period rose to €14.84 billion ($14.82 billion) from €11.9 billion a year earlier. It booked a net profit of €1.79 billion from €1.27 billion last year.