INDITEX UNVEILED a 68 per cent year-on-year surge in first-half net profits as global expansion and solid growth in sales consolidated recovery at the Spanish fashion group.
The world’s largest clothes retailer and owner of Zara said profits for the six months to the end of July were €628 million, compared to €375 million last year, when global demand was battered by financial turmoil, job insecurity and tight credit conditions.
The result came from a 14 per cent increase in sales to €5.5 billion, including a 5 per cent improvement on a same-store basis. On a constant currency basis sales were ahead 11 per cent year-on-year.
Inditex pushed ahead with expansion, with 173 new stores in 37 countries. These included the first Zara stores in India, in Mumbai and Delhi. By July 31st it had three shops in the country, and expects to open up to another seven in the next 12 months.
The focus on Asia reduced Inditex’s exposure to the domestic market, where confidence remains shaky. The firm benefited from a surge in demand in Spain in the second quarter ahead of a rise in value-added tax in July.
The results came in well above analysts’ expectations, with most forecasting net profits of €560-€570 million. Sales were in line with market estimates, and analysts warned the company’s profit growth was against a low base and would not be repeated.
Zara started online selling early this month in six European countries and will extend the service to Ireland, Austria, the Netherlands, Belgium and Luxembourg shortly. – (Copyright The Financial Times Limited 2010)
