Inditex’s profit growth slows at start of year due to cold weather

Fashion retailer’s net earnings rose two percent to 438 million euros in first quarter

Galician-based global fashion retailer Inditex booked a net profit of 438 million euros in the first three months of the financial year, an increase of two percent over a year earlier in what was its slowest quarterly profit growth in the past four years.

Sales in the period February 1 to April 30 increased five percent to 3.593 billion euros as gross operating profit in the form of EBITDA declined 1.9 percent to 749 million, the first ever fall in this line of its profit and loss account.

The results were in line with the forecasts of analysts who had predicted something of a slowdown because of adverse weather conditions, which impacted sales and exchange rate factors.

“This was definitely a tough quarter, and the rest of the year, especially the next two quarters, is going to remain very difficult,” Anne Critchlow, a London-based analyst at Société Générale, told Bloomberg.

Despite the relatively weak performance in the first quarter, Inditex, whose leading brand is Zara, announced that store sales in local currencies increased by eight percent between May 1 and June 7, 2013.

The company’s board proposed a total dividend on 2012 earnings of 2.20 euros per share for a total payout of 1.371 billion euros.

Inditex has created 10,000 jobs over the past 12 months and now has a workforce of over 120,000 and more than 6,000 stores worldwide.

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