European Profits Set to Trail U.S. on Lower Cost Reductions

Narrowing margins and slowing sales at Hennes & Mauritz AB and Royal Philips Electronics NV suggest more European companies may miss analysts’ earnings estimates, underperforming U.S. peers that cut expenses in the recession.

Stockholm’s H&M, the world’s second-largest clothing retailer, and Amsterdam-based Philips were among at least five European companies that last week disclosed less-than-anticipated sales or profitability. The announcements contrast with statements from U.S. companies FedEx Corp. and Bed Bath & Beyond Inc., which both boosted profit forecasts last week.