Shares in H&M have plunged to a four-year low after the Swedish fashion retailer announced that second-quarter sales to clear growing stockpiles could be bigger than last year's.
The news overshadowed the announcement that H&M will open its first new store brand in three years, Arket.
But the expansion was not enough to halt the slide in the company's shares, which fell 5.6 percent to 223.90 Kroner (US$25.25) at 2.04pm (GMT).
H&M's inventory levels have climbed 30 percent year-on-year, according to Berenberg Michelle Wilson, who told Bloomberg that steep discounting will damage the retailer's profit.
Ms Wilson added that the fashion company hinted during a conference call that it will be difficult to reach its 10 to 15 percent sales growth target for this year.
H&M has also revealed that it will open its first Arket store in London towards the end of the year.
Arket will sell clothes as well as a limited range of home furnishings at higher prices than H&M branded stores.
More Arket stores are planned for Brussels, Copenhagen and Munich and the brand will also sell online, starting with 18 European countries.