Zara owner Inditex profits up 27%

Thu, Dec 13, 2012, 00:00

Inditex, the owner of the Zara clothes brand, has hit the 6,000-store mark as the Spanish fast-fashion chain reported net profits had risen 27 per cent for the first nine months of the year compared with the same period last year.

The largest retail fashion group in the world by sales, which is also Spain’s largest company by value, opened 360 new stores in 54 different countries in the first nine months, taking its global shop count to 5,887 across 86 markets as growth in China continued apace.

The company opened its 6,000th store this month with the inauguration of a Zara shop in London’s Oxford Street.

Inditex said net profit over the first nine months of the year rose from €1.3 billion to €1.6 billion year on year, with the group achieving its highest ever quarterly gross margin over sales in the third quarter.

The results, which outpaced market consensus expectations, the latest in a line of expectation-beating earnings, which have prompted some analysts to argue that the company will be unable to sustain its strong growth.

Inditex said store sales in constant currency terms increased 15 per cent between the start of August and December 9th, indicating that its strong growth was being sustained during the Christmas period.

Inditex’s gross margin over sales rose 40 basis points to 62.1 per cent in the third quarter compared with the previous quarter, the highest quarterly margin in the company’s history.

At the same time costs fell 16.8 per cent quarter on quarter, or €1.4 billion, and by €4 billion for the first nine months of the year. Earnings before interest, tax, depreciation and amortisation rose 25 per cent for the nine-month period to €2.77 billion.

Inditex shares, which have risen 65 per cent in the past 12 months, fell 1.25 per cent to €102.30 in morning trading. – (Copyright the Financial Times Limited 2012)