Inditex’s earnings climb 27 percent in first nine months on ongoing expansion

Galician-based global fashion retailer Inditex continued to enjoy strong growth in the first nine months of its financial year on the back of a good performance in Asia and the United States, which more than offset weakness in Spain and other parts of Europe.

Inditex’s sales climbed 17 percent in the period February-October to 11.362 billion euros, compared with the same period a year earlier as net profit rose 27 percent to 1.655 billion. Both figures were records and in line with analyst forecasts.

The group continued to expand in the period creating a further 6,598 jobs, bringing its global workforce to 116,110 in 86 countries. The group had 5,887 outlets at the end of October after entering the Macedonian and Armenian markets. It hit the 6,000-mark for stores on December 5 when it opened a Zara outlet on Oxford Street in London.

However, the figures showed a slowdown in the pace of Inditex’s earnings growth and the market reaction was muted. In the third quarter annual net profit growth was 21.5 percent, compared with 32 percent in the first half, a trend that was also observable in the company’s operating profit. Operating costs also rose. After an initial drop, Inditex’s shares recovered and were up 0.10 percent in late trading at 103.70 euros.

Inditex said store sales in constant currency terms rose 15 percent in the period August 1-December 9, compared with the same period a year earlier.

“Earnings are basically in line, showing a slight slowdown in the second half of the third quarter,” Bloomberg quoted Peter Farren, an analyst at Bryan Garnier in Paris, as saying. “The trading update for the fourth quarter is very much in line with forecasts for the full year but I assume like-for-like sales will moderate during the second half of next year.”