YOUNG Britons’ appetite for chic street fashion is set to make the UK the No2 market for Hennes & Mauritz, Europe’s biggest fashion retailer.

The Swedish company yesterday attributed a 16 per cent surge in UK sales in the third quarter to an aggressive store-opening programme. Turnover in Britain increased to SKr1.3 billion (£98 million).

H&M’s sales in Sweden edged up by just 2 per cent to SKr1.4 billion.

Leif Persson, chief financial officer, said that the UK would next year become H&M’s second-biggest market behind Germany. “Womenswear is selling especially well, with an emphasis on more tailored dressing,” he added.

H&M has earmarked SKr2 billion a year towards its goal of increasing its overall store count by between 10 and 15 per cent a year. The retailer opened its 1,000th store in the third quarter and plans to open another 65 outlets this year.

In the UK this year, H&M has opened seven stores and plans to open another five, taking its total UK outlets to 91.

The news came as H&M revealed an 18 per cent increase in third-quarter profits to SKr2.45 billion, above expectations of SKr2.43 billion. Turnover was up 14 per cent on a reported basis to SKr12.8 billion — of which Germany contributed SKr4.2 billion, Sweden SKr1.4 billion and the UK SKr1.3 billion.

H&M’s gross margins increased to 55.9 per cent, from 55.6 per cent in the third quarter of last year. Operating margin was 18.5 per cent, against 17.8 per cent last time.

Mr Persson noted that the performance of H&M’s business in the United States was “very pleasing”. He said that he expected the group’s US arm to break even by the end of the year.

H&M’s sales in the US were SKr853 million in the period from the start of June to the end of August, representing a 27 per cent rise in Swedish currency terms from the same period in 2003.

H&M also disclosed that it planned to open its first store in Dublin next year, as well as breaking into the Hungarian market, which will expand its retail presence to 22 countries.