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(Bloomberg) — Hennes & Mauritz AB said that stockpiles of unsold clothing, which hit profit in the first quarter, would be under control by the end of the year.

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The Swedish retailer, which has long struggled to maintain a tight inventory, said that part of the reason it’s sitting on so much stock is because disruption in the Red Sea means it has had to ship goods around Africa and bring them in two weeks earlier than expected. However, Chief Executive Officer Daniel Erver said the company is working on whittling down the excess stockpiles and now has better quality products.

“We have more relevant goods, so we feel well prepared for both the spring shift that comes now in connection with Easter but also the summer season,” the executive said in an interview. “Towards the end of the year we see that we will be in a better inventory situation than we were a year ago.”

A strong kroner and discounts the company had to offer to plow through excess inventories resulted in first-quarter profit of 1.2 billion Swedish kronor ($120 million), much lower than the 1.9 billion kronor analysts had expected. Net sales reached 55.3 billion, also below estimates.

H&M shares, which fell as much as 5.1% in early trading in Stockholm, were 0.2% lower at mid-day in Stockholm.

Erver, a company veteran, has struggled to revive top-line growth and rebuild faith in the Swedish retailer’s midterm growth target for earnings before interest and taxes of 10%. The latest quarter shows that his efforts to claw out of the company’s troubles through higher marketing spending has not brought the sustainable sales boost analysts had hoped for.

Next, Zara

The weaker results at H&M came as Next Plc raised its profit guidance for the current fiscal year on Thursday, after topping £1 billion of profit last year. The UK clothing and homewares retailer said the company is growing on many fronts, with sales at home and overseas rising and its Total Platform, where it sells third-party brands online, also showing good growth. Next shares rose as much as 9% in early trading in London.

Earlier this month, rival Inditex — the owner of sector-darling Zara — reported a disappointing start to the year, feeling the impact of cuts in consumer spending amid a slowdown in large parts of the global economy. The world’s largest listed clothing retailer saw its share plunge on the report.

H&M, controlled by Sweden’s Persson family, said its preliminary sales figure for March shows an increase of 1% in local currencies compared to the same month the previous year.

The company said the negative effect of external factors, increased markdowns and investments in customer offerings is estimated to be significantly smaller in the second quarter than in the first.

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