Profit at leading clothes retailer Inditex up 12%

THE WORLD’S leading clothes retailer, Inditex, announced upbeat early spring sales yesterday while reporting a 12 per cent rise in annual profit driven by aggressive expansion into fast-growing Asia.

The owner of fast-fashion chain Zara has outpaced rivals during the downturn in austerity-wracked Europe and has more than 5,500 stores across about 80 countries including new markets Azerbaijan, Australia and South Africa.

Asia is a focus of growth for the cash-rich retailer – especially China, which will account for a third of new store openings in 2012 and where Zara will launch an online store this winter.

Shares, which had risen to a record high on Tuesday in anticipation of a dividend payout, traded steady yesterday. Inditex said it would raise its dividend 12.5 per cent to €1.80.

“The level of organic growth is exemplary, it is driving into Asia, but the risk is always whether it can maintain this level of growth,” said Alejandro Varela, fund manager at Renta 4, with €400 million under management.

The retailer, whose other labels include upmarket Massimo Dutti and accessories brand Uterque, met expectations with a 2 per cent rise in full-year net profit to €1.9 billion.

Inditex reported store sales in local currencies up 11 per cent from February 1st to March 14th when Zara was selling its spring range, including floral print shirts, lemon tailored coats and studded ankle boots. This meant like-for-like sales were up about 3 per cent in February and early March during a difficult period when there was snow through much of western Europe, said Société Générale analyst Anne Critchlow.

Sales were up 10 per cent during the year, 4 per cent on a same-store basis, and rose across geographic zones, the company said, without breaking down sales by region.

The gross margin was 59.3 per cent, similar to the previous year, the company said.

Chairman and chief executive Pablo Isla said he expected stable gross margins in 2012.

Just under three-quarters of sales are from Europe. Asia and the rest of the world excluding Americas accounted for 18 per cent of sales, up from 15 per cent the previous year. – (Reuters)