Dec 10, 2009
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Zara owner Inditex 9-month net profit above forecast

Dec 10, 2009

MADRID, Dec 10 (Reuters) - Inditex (ITX.MC), Europe's biggest clothing retailer and owner of the Zara chain, posted a smaller -than-expected fall in nine-month net profit and said sales growth had edged up heading into the key Christmas period.

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Sales at constant exchange rates rose 9 percent in the period Aug. 1 to Dec.6, Inditex said, after posting nine-month net profit of 831 million euros ($1.22 billion), compared to a Reuters poll forecast of 815 million.

Total sales for the period ending Oct. 31 rose 5.5 percent to 7.76 billion euros boosted by Inditex's aggressive expansion programme. The Spanish retailer, which runs brands in 73 countries from teen label Bershka to upmarket label Massimo Dutti, opened 266 new stores in the third quarter, bringing its total to 4,530.

"That looks like a good start to the fourth quarter," said Anne Critchlow, Societe Generale analyst.

At 0856 GMT Inditex's shares were up 2.3 percent to 42.22 euros.

However, analysts estimate like-for-like sales -- which strip out the boost to turnover from new stores -- fell during the third quarter more than they expected as cost controls failed to compensate for falling consumption, particularly in home market Spain.

"I think you'll find they have missed the consensus for like-for-like," said Tony Shiret, analyst at Credit Suisse, estimating a drop of between 4 and 5 percent in the quarter.

Inditex, which vies with U.S. rival Gap (GPS.N) to be the world's largest clothing retailer, had said it hoped to improve its like-for-like sales in the second half after they fell 2 percent in the first half, but gave no details on like-for-like sales for the nine months.

Societe Generale's Critchlow said the like-for-like sales drop was still better than Swedish rival Hennes & Mauritz (HMb.ST) which had an average drop of 7 percent. H&M reports its November sales figures on December 15.

Clothing retailers have had a tough time in the economic downturn, and have been forced to cut costs and manage stocks tightly as shoppers have reined in discretionary spending.

Inditex has had the added burden of making about a third of its sales in Spain, which has suffered a particularly deep recession. But its focus on low prices and its geographic spread has helped it to cope better than some rivals.

Spanish retail sales fell 3.9 percent year-on-year in inflation-adjusted terms in October, a steeper fall than the previous month, government data showed on Thursday 10 December.

Sweden's H&M has reported a string of weaker than expected monthly sales figures, while Gap relied on cost cuts to boost third-quarter profits, with revenues up just 1 percent. ($1=.6779 euros) (Reporting by Sarah Morris; Editing by Mike Nesbit)

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