Swedish fashion giant HandM posted a steeper than expected fall in quarterly profit on Wednesday, citing currency headwinds and a challenging retail climate but said June sales were \"off to a good start.\" The brand, known for cheap and cheerful fashion clothing for young women, is in neck-and-neck global competition with Spanish group Zara. Net profit in the March to May period dipped 11 percent to 4.655 billion kronor (539 million euros, $726 million), marking the third quarterly earnings decline in a row and missing a 4.88-billion-kronor consensus by analysts polled by Dow Jones Newswires. Spring sales rose five percent in local currencies but revenue was flat at 31.6 billion kronor due to a negative impact from exchange rates. \"Overall sales were not satisfactory mainly due to the continued challenging situation for the fashion retail industry as well as unfavourable weather in March and a couple of weeks into April,\" chief executive Karl-Johan Persson said in a statement. An unusually harsh winter in much of Europe and North America meant HandM had to offer bigger discounts than planned on many of its products. The company opened almost 100 new stores in the period, taking the total number of outlets to 2,908. \"The growth target is to increase the number of stores by 10 to 15 percent per year with continued high profitability, while at the same time increasing sales in comparable units,\" the group said. Using an average annual exchange rate, HandM remained the largest clothing company in 2012 with its sales edging out Spanish competitor Inditex, which owns Zara. But HandM risks losing its number one spot this year to Inditex, which has twice as many stores, is growing faster and is more profitable. The Swedish cheap\'n\'chic fashion retailer said there were \"still great opportunities for expansion in markets such as Russia, Germany, Britain, Italy, Poland and France.\" The opening of the company\'s online US store would take place in August after being delayed several times, it said.