* June same-store sales -5 percent, vs -1.7 percent forecast
* June total sales +4 percent, vs +8.3 percent forecast
* Shares fall 1.9 percent
(Adds share reaction, analyst's comment, background)
By Anna Ringstrom
STOCKHOLM, July 15 (Reuters) - Hennes & Mauritz, the world's third-biggest clothing retailer, reported a bigger than expected 5 percent year-on-year fall in sales at established stores in June, knocking its shares on Wednesday.
"It's no news the market is weak. The fact the June numbers are even worse than expected may be due to unusual markdowns," said Anders Wiklund, analyst at Evli, pointing to large and early price cuts to counter weak demand.
"But this is after all not one of the most important quarters so I don't read too much into these numbers."
Europe's retailers are struggling with the worst economic downturn since the Second World War. Though there have been signs recently that consumer sentiment is starting to improve, a recovery is far from certain.
Swedish H&M and Spanish Inditex, Europe's biggest clothing retailer which owns Zara, have so far shown themselves as weathering the downturn better than mid-market rivals such as Britain's Marks & Spencer and Next, helped by a focus on low-cost, fast-moving fashions, and geographic spread.
Budget fashion chain H&M, which has over 1,800 shops in more than 30 countries, only gives round numbers for sales and does not give currency figures.
The average forecast in a Reuters poll had been for its like-for-like sales to drop 1.7 percent. Total sales were up 4 percent, below the average forecast for an 8.3 percent rise.
"These are some disappointing sales figures for June. It seems the market is still tough, it seems H&M and the whole retail business is having very intense competition, and it seems the price pressure has continued in June," said Soren Lontoft Hansen, analyst at Sydbank. "But I think this will ease off as we go into the fall ... and that will benefit H&M."
H&M shares were down 1.0 percent to 382.5 Swedish crowns at 0740 GMT, underperforming a 0.1 percent fall in the DJ Stoxx European retail index.
In late June, H&M reported forecast-beating fiscal second-quarter profit and said currency swings were becoming less costly. But like-for-like sales in May, the last month of the quarter, fell a bigger than expected 9 percent while total sales were unchanged from a year earlier.
Main rival Inditex, which in June reported a drop in first-quarter net profits that roughly matched expectations, is due to report fiscal second-quarter earnings on Sept. 16.
H&M last month signed up luxury shoe maker Jimmy Choo Ltd as the latest in a string of high-profile guest designers. (Additional reporting by Katarina Gustafsson and Eva Odefalk; Editing by Greg Mahlich and Dan Lalor)