H&M Hennes & Mauritz AB (HNNMY) reported weaker-than-expected May sales Thursday, increasing investor concern that the fashion retailer will struggle to gain ground against its ever-expanding rival Inditex SA (IDEXY) .

H&M said overall sales for the three months ending on May 31 increased 5% on a local currency basis and grew by 10% once converted into Swedish kroner, to SEK59.538 billion ($6.84 billion). However, its May sales figures missed analysts' forecasts, rising only 4% on a local currency basis against a 6% expectation. H&M also said its total number of stores grew by 10.3% from the same period last year to 4,498. 

H&M shares closed at SEK212.20 in Stockholm Wednesday after rising 2.71% on the session, although that only trims the year-to-date loss to around 16%. That contrasts sharply to Inditex, the world's biggest clothing retailer, which has gained more than 8.2% so far this year and closed at €35.22 Wednesday in Madrid.

Inditex, best-known for its Zara clothing brand, said net sales increased by 14% to €5.569 billion ($6.24 billion) in the three months ending April 30, helping boost its bottom line by 18% to €654 million. However, the group's gross margin only improved buy one basis point to 58.2% from the same period last year, according to its quarterly update, suggesting that even its rapid increase in online sales and its ongoing dominance over rivals such as H&M could be difficult to maintain.

The company told investors on a conference call following the results that it doesn't expect to see a decrease in gross margins for the 2017 financial year and that it expects to see like-for-like sales growth in its domestic Spanish market.