Net profit for the fiscal year ending in November 2013 rose by 1.7 percent to 17.15 billion kronor ($2.64 billion).

In the fourth quarter (September to November), the net profit increase of six percent to 5.61 billion kronor missed the expectations of analysts surveyed by Dow Jones Newswires, who had forecast a 14.0-percent increase.

H&M's sales grew only thanks to an increasing number of stores and the launch of new online shopping sites.

Last year, the firm passed the 3,000-store mark and is currently above 3,100, with its first shop in the southern hemisphere inaugurated in 2013 in Santiago de Chile

Annual sales increased by six percent to 150.09 billion kronor with especially positive results in the fourth quarter, where they grew by 12.0 percent to 42.61 billion kronor.

"The financial year 2014 has got off to a good start, with strong sales development in December and January," the company said in a statement.

"Although there are still macro-economic challenges in several of our markets, we are optimistic about 2014."

H&M said its 2013 results were affected by "major long-term investments", "increased price markdowns" compared to a year earlier and "negative currency translation effects of around 600 million kronor".

Disappointed investors punished H&M in Thursday morning trading on the Stockholm stock exchange, with share prices dropping three percent.

The Swedish firm said its growth target remained "intact", with a 10-to-15-percent shop increase per year.

In 2014, Australia and the Philippines will get their first H&M stores, and the company says their expansion will be particularly strong in China and the US.

Germany was the company's first market in 2013, with a four-percent sales increase in euros, followed by the US (13 percent in dollars) and France (eight percent in euros).

H&M and Spanish competitor Inditex (Zara) battle for dominance in the global fashion industry.

Amancio Ortega's group will publish its results on March 19th.