Fashion giant H&M said on Thursday it has suspended a number of employees over the use of a racial slur relating to the name of a hat to be sold at stores of its & Other Stories brand.

CNN Business, which first reported the incident, said that the slur, in an internal H&M document, related to a hat that appeared on a list of items and accessories to be sold in the autumn/winter collection.

"We are deeply sorry to have discovered that one of our brands, & Other Stories, used a racist slur in an internal product overview," H&M spokeswoman Ulrika Isaksson said in a written comment to Reuters.

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"We take the use of racially offensive language extremely seriously. While internal and external investigations are taking place, we have suspended the team and managers responsible for this area of the business."

H&M, the world's second biggest fashion retailer, did not say how many employees had been suspended.

In 2018, the Swedish company was forced to apologise for an advert that was perceived as using racist language and in its statement on Thursday H&M acknowledged that it had "challenges with the diversity of some of our own teams".

It said it would also take further measures including specific targets for boosting diversity in its major markets by the end of 2020 and the creation of an external advisory council to consult on its business direction.

According to H&M's website, & Other Stories has 70 stores in 17 markets in Europe, the United States and Asia.