Jun 13, 2012
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Inditex defies crisis to grow net profit 30 percent

Jun 13, 2012

MADRID - Spain's Inditex SA, the world's largest clothes retailer, showed on Wednesday it can sell to both fashion-hungry shoppers in emerging Asia and cash-strapped consumers in Europe, posting a sharp rise in first-quarter earnings.

Pablo Isla of Inditex / Photo: Inditex

The owner of Zara and a clutch of other brands including upmarket Massimo Dutti beat forecasts with a 30 percent rise in net profit to 432 million euros ($538.1 million) and sales of 3.4 billion. A Reuters poll had found average forecasts for net profit of 383.4 million euros and sales of 3.3 billion

Expansion to new markets, which included Georgia, Bosnia and Ecuador, fueled growth.

The firm said sales in constant currency rose 14 percent between Feb. 1 and June 10, the start of its second quarter.

Societe Generale analyst Anne Critchlow estimated like-for-like sales - which strip out the boost from new store openings - climbed at least 6 percent.

"That has continued into the first six weeks of the second quarter, May and half of June, which when you think of what's going on with the euro crisis is amazing," she said.

Euro-zone finance ministers agreed on Saturday to lend Spain up to 100 billion euros to shore up its teetering banks, but respite for Madrid and the euro zone could be brief and uncertainty about the outcome of the Greek elections is likely to further dampen spending and confidence.

Inditex said it would start selling flagship Zara brands online in China in September.

Analysts are likely to press Inditex on a conference call at 0700 GMT for how the crisis in the euro zone could hit sales at the group, which runs more than half a dozen fashion labels and has 5,500 stores across more than 80 countries.

While the blue-chip Ibex-35 index has shed about a quarter of its value this year, Inditex shares have risen by 6.6 percent.

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