Swedish retailer Hennes & Mauritz (HMb.ST) down 2.5 percent at 331.70 crowns after reporting that the strong US dollar has had a “very negative impact” on purchasing costs.

It said the situation could be even worse for its third and fourth quarters due to the rise in the U.S. dollar.

H&M sources 80% of its clothes in Asia, in contracts denominated in U.S. dollars however sells most of them in Europse. In comparison, their biggest competitor Inditex (ITX.MC) sources more of its products from Europe and therefore has not taken the same hit.

“We expect continued margin contraction in the remainder of 2015,” said Bernstein analyst Jamie Merriman. H&M shares have risen around 4 percent this year, underperforming Inditex, which is up 29 percent.