World's largest clothing retailer beats forecasts with €432m profit – fuelled by expansion into new markets
Spain's Inditex, the world's largest clothes retailer, showed on Wednesday it can sell to both fashion-hungry shoppers in emerging Asia as well as cash-strapped consumers in Europe, posting a sharp rise in first-quarter earnings.
The owner of Zara and a clutch of other brands including upmarket Massimo Dutti beat forecasts with a 30% rise in net profit to €432m (£347m) and sales of €3.4bn. A Reuters poll had found average forecasts for net profit of €383.4m and sales of €3.3bn.
Expansion into new markets, which included Georgia, Bosnia and Ecuador, fuelled growth.
The firm said sales in constant currency rose 14% between 1 February and 10 June, the start of its second quarter.
Société Générale analyst Anne Critchlow estimated like-for-like sales – which strip out the boost from new store openings – climbed at least 6%.
"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.
Eurozone finance ministers agreed on Saturday to lend Spain up to €100bn to shore up its teetering banks, but respite for Madrid and the eurozone 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.
The group 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%.
