New York City -- Hennes & Mauritz AB Thursday reported that its net profit in the first quarter fell 30% from a year earlier on “significantly higher” cotton prices, higher transportation costs and a stronger Swedish krona. The chain said profit in the quarter ended Feb. 28 fell to 2.62 billion Swedish kronor ($414 million).

The gross margin slipped to 57.8% in the quarter from 61.9% a year ago, with H&M noting "significantly higher" cotton prices, less spare capacity and higher transportation costs along with a negative U.S. dollar effect.

The company said it plans to open 97 stores and close eight during the second quarter of the year. China, the United Kingdom and the United States are expected to be the biggest expansion markets for H&M in 2011.