Dive Brief:

• Swedish discount clothing retailer Hennes & Mauritz, known as H&M, revealed Thursday that fourth-quarter profits missed estimates.

• Stiff competition in the discount clothing sector — plus, believe it or not, mild winter weather (in Europe) — contributed to muted sales and forced heavy discounts on top of already low prices.

• H&M said it expects the economy to continue to improve, but competition to remain strong. The second-largest European retailer will continue its expansion worldwide, opening 375 stores this year — up from 356 new stores last year — mostly in China and the U.S. 

Dive Insight:

H&M’s struggles to realize its profit ambitions is an indication of how slow the economy’s improvement has been, but also, and perhaps more telling, how stiff the competition is in the discount-clothing arena. Like its competitors, H&M has been forced into heavy discounting to lure consumers through its doors. It remains to be seen if H&M can boost its margins as it expands worldwide, physically and online, in this very heated retail clothing environment.