March 2 (Bloomberg) -- Hennes & Mauritz AB, Europe's second-largest clothing retailer, hired Australian pop singer Kylie Minogue to model its range of beachwear.

The company designed a line under the name ``H&M Loves Kylie,'' which contains 15 styles and will be in all stores by mid-May, Stockholm-based H&M said today in a statement.

H&M, which was surpassed last year by Inditex SA as Europe's largest apparel retailer, has offered collections designed by Viktor & Rolf, Karl Lagerfeld and Stella McCartney to revive revenue. It also teamed up with pop singer Madonna to sell a line of clothes and accessories that appears this month.

``This is a way of getting people to come to the stores during months when there's not a lot of shopping activity, and also a way of lifting their image,'' said Mattias Karlkjell, an analyst at ABG Sundal Collier in Stockholm. ``Kylie should work, as she, just as Madonna, is ahead in fashion.''

Shares of H&M rose 1.5 kronor, or 0.4 percent, to 365.5 kronor in Stockholm. They advanced 29 percent in 2006, while shares of Arteixo, Spain-based Inditex, which added stores offering low-cost fashion more quickly, gained 48 percent.

``When we think Australia and glamour we think Kylie, who is such a stylish person,'' Margareta van den Bosch, H&M's head of design, said in the statement.

Sexiest Woman

Minogue, 38, has amassed over 40 hit singles globally and seven number ones in the U.K., including ``I Should Be So Lucky,'' ``Spinning Around'' and ``Can't Get You Out of My Head.'' She was voted both the sexiest woman and the best dressed celebrity of the year by readers of Britain's Okay magazine in 2003, according to the official Kylie Web site.

The singer last year returned to the stage after recovering from breast cancer and recently performed in Australia and the U.K. with her Showgirl Homecoming Tour.

The collaboration with Minogue may be a sign that H&M has ``big plans'' in Asia and that Australia, the singer's home country, may be the next market where it seeks to establish itself, said Karlkjell, who has a ``buy'' rating on H&M.

Before the retailer entered the U.S., it signed contracts with a number of American actors, he added.

H&M said in a separate statement today it will open its first Asian store this month in Hong Kong. The company plans to add three more stores in Hong Kong this fall and aims to open two stores in Shanghai, with the first due to open in April. H&M ``sees vast potential for expansion'' in China, it said.

While H&M isn't currently planning to enter Australia, there are ``many potential future H&M markets,'' spokeswoman Annacarin Bjoerne said in a telephone interview today. The company is opening stores in China, Slovakia, Greece and Qatar this year and plans to enter Japan next year, she said.

H&M said 10 percent of all the revenue generated from the Kylie clothing line will be donated to the WaterAid charity, which provides safe water for households as well as sanitation and hygiene education to people in the world's poorest areas.

To contact the reporters on this story: Niklas Magnusson in Stockholm at nmagnusson1@bloomberg.netAngharad Couch in London at acouch2@bloomberg.net

Last Updated: March 2, 2007 13:07 EST