H&M, the world's second largest clothing retailer, posted a surprise drop in sales last month, the first such decline in four years. 

The Swedish budget fashion firm said today that local-currency sales fell 1% year-on-year in February, compared to a forecast in a Reuters poll of analysts for a 6% rise. 

That was in stark contrast to bigger rival Inditex, the owner of Zara, which reported earlier today a 13% increase in sales from February 1 to March 12. 

The total clothes market in H&M's biggest market Germany shrank 9% in February, according to a survey of retailers conducted by Textilwirtschaft and published on March 8. 

Spain's Inditex is less exposed to northern Europe than H&M and has a larger share of sales from brands other than its flagship Zara brand. It also has a larger share of sales in emerging markets. 

H&M saw sales growth slow and profits fall last year.

It is branching out into more brands to reach more customers and investing to improve its online services in response to tougher competition in its budget segment and from online-only players. 

It said a negative calendar effect of 4 percentage points weighed on sales in February, which is the final month of the group's fiscal first quarter. 

Fiscal first-quarter sales were 47 billion crowns ($5.25 billion), up from 43.7 billion the same time last year, but below a 48.1 billion mean forecast in Reuters' poll of analysts. 

H&M, which did not comment further on the sales figures, is due to publish its full fiscal first-quarter report on March 30. 

The company in January launched a target for annual local-currency sales growth of 10-15% and said it expects to be within that range from this year on.