Both chains have expanded quickly in recent years

Spain's Inditex, owner of the Zara chain, has posted a 26% rise in annual net profits to 803m euros ($964m; �555m) for the year to 31 January.

Its Swedish rival Hennes & Mauritz made a 193m euros net profit for its first quarter, up 21% on a year earlier.

Yet while profits were up at both firms, their sales disappointed.

Weather effect

H&M said its sales across the entire three months to 28 February were up 20% year-on-year to 1.6bn euros, but cautioned that February sales increased by just 11%, instead of the expected 15%.

It further warned that March sales in some of its markets had been hit by cold weather and the delayed start to the European spring.

Annual revenues at Inditex totalled 6.7bn euros, up 21%, yet its like-for-like sales gained just 5%, down from 9% a year earlier.

Inditex opened 448 stores and franchises last year - everywhere from Shanghai to Serbia - and said it planned to open a further 410 to 490 outlets in 2006.