Swedish fashion company H&M Group on Wednesday reported a decrease of profit by 18 percent in the second quarter due to high cotton prices.

After-tax profit amounted to 4.26 billion kronor (about 670 million U.S. dollars) during the three months while the profit was 5.21 billion kronor (about 813 million U.S. dollars) at the same period last year, the company said in a statement.

"Our profitability remained strong with an operating margin of 20.3 percent despite strong negative effects from many external factors that were beyond our influence, such as the high cotton prices," H&M Group CEO Karl-Johan Persson said.

He also blamed the cost inflation in the sourcing markets, a provision of 248 million kronor related to incentive program for all employees and a strong kronor for the decreasing profit.

Meanwhile, H&M's sales including VAT rose by 10 percent in the first six months of the financial year from Dec. 1, 2010 to May 31, 2011.

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