PARIS — Inditex, the Spanish fast-fashion giant, on Wednesday said “outstanding” sales at its Zara chain helped increase second-half profits by 14.6 percent.
Net income in the three months through July 31 improved to 144.7 million euros, or $184 million, from 123.6 million euros, or $152.1 million, in the corresponding period a year earlier, broadly in line with analysts’ expectations.
Sales in the period gained 19.7 percent to 1.76 billion euros, or $2.24 billion. Through the half, sales gained 23 percent to 3.47 billion euros, or $4.3 billion, while net income increased 19 percent to 296 million euros, or $376.4 million. Currency conversions were made at average exchange rates for the respective periods.
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“Zara showed outstanding growth,” said Pablo Isla, the firm’s deputy chairman and chief executive officer, in a conference call. “The quarter was quite strong.”
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He added that sales were robust in August and early September.
For the last two years, Inditex, which also runs the Pull & Bear, Massimo Dutti and Bershka chains, has been one of Europe’s most dynamic retailers, logging consistent double-digit gains in profit and sales. Last year, it even pulled ahead of Sweden’s Hennes & Mauritz as Europe’s largest clothing firm in terms of sales. In the last year, its stock has soared 36 percent.
Inditex shares dropped 1.73 percent to close at 34.07 euros, or $43.13, in trading Wednesday on the Madrid Bourse.
Isla said the firm would continue to expand aggressively, highlighting opportunities for Zara to grow in Asia, Russia and Italy.
For example, in Italy, where Zara opened its first stores in 2002, the chain should have 40 units by yearend, Isla said.
Isla said the firm also wanted to open stores twice as fast in Asia as in the rest of the world, underscoring that market’s potential. Already China is shaping up as one of fast-fashion’s newest battlegrounds. (Earlier this year H&M said it would open its first stores in China in 2007.)
Zara opened its first stores in Shanghai earlier this year. Isla said sales so far had exceeded expectations. “Sales to white collar locals and overseas transplants have been above our initial expectations,” he said.
Isla said Zara’s first store in Beijing would bow by the end of the firm’s fiscal year.
Isla said Inditex would grow its total retail space this year by 15 to 20 percent, with capital investments to open new stores expected to reach as much as 950 million euros, or $1.2 billion.
“We like the direction the company is taking with its space growth program,” wrote Allegra Perry, an analyst with Lehman Brothers in London.
Overall, Zara, which accounts for 66 percent of Inditex’s total sales, should open some 150 stores this year, after opening 129 stores in 2005.
Bershka, Inditex’s rapidly growing teen chain, will open as many as 75 stores, while the Massimo Dutti chain will add about 40 stores.
Inditex also runs the Kiddy’s Class, Stradivarius, Oysho and Zara Home concepts.
Though Isla was upbeat about most markets, he said Germany continued to pose challenges.
“We are seeing no improvement in Germany,” he said. “It remains the most difficult in Europe.”