First quarter net profits for Spain's rapidly expanding fashion retailer Inditex, owner of the trendy Zara chain, came in short of expectations today as operating and financial costs rose faster than sales.
Inditex said net profits for the February to April quarter rose 20 per cent to €98.5 million on a 23 per cent gain in sales to €1.2 billion.
Although sales slightly outstripped expectations, a 26 per cent rise in operating costs dragged down the bottom line. The company said sales growth had been kept in check by the fallout from the March 11th attacks in Madrid and the effect of weak Latin American currencies.
Inditex, which recently moved into home furnishings through the Zara home chain, said gross margin - a key measure which puts sales against costs - came in at a better than expected 52 per cent.