Zara owner’s nine-month profit soars 32.5% but sales growth slows down

Zara owner Inditex said on Wednesday its net profit jumped 32.5 per cent in February-October, but the fast fashion giant’s sales growth in the nine-month period slowed down from a year ago amid tougher times for consumers.

The world’s biggest fashion retailer said its net profit was €4.1 billion expected by analysts, most of whom are still betting on the company’s ability to sell fashion faster and draw more aspirational shoppers.

The company behind Zara and other brands is investing in bigger but fewer stores and logistics capacity to back up its online sales and deliver clothes a few days faster than its rivals, according to analysts.

Inditex’s sales, in stores and online, rose 11 per cent year-on-year: a slower pace than the 19 per cent increase reported a year ago, but better than its main rival H&M, as analysts had forecast. Its gross margin reached 59.4 per cent.

In the first half of the year, Inditex had posted a 13.5 per cent rise in sales and a 40 per cent net profit increase.

Between November 1st and December 1st, Inditex’s sales grew 14 per cent in local currencies from the same period last year, showing a good start to the holiday shopping season, with Zara offering 40 per cent discounts during the crucial Black Friday week.

This week, Zara pulled an advertising campaign featuring statues wrapped in white from its websites after it prompted some Palestinian activists to call for a boycott of the retailer. The company said it regretted the “misunderstanding” over the advertising campaign. – Reuters

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