Inditex sales growth slows on warmer weather
The Financial Times
Sales growth in the third quarter at Inditex, the owner of the Zara clothes chain, was its second slowest quarter since 2001 in spite of the company achieving its highest ever gross margin.
Against a backdrop of unseasonably hot winter weather across Europe that has slowed sales of coats and jumpers, Inditex, which this year surpassed H&M to become the world’s largest listed clothing retailer by value, said that sales for the third quarter rose annually by 4.8 per cent to €3.5bn.
The Galicia-based outlet’s rapid proliferation of stores continued apace, opening 358 new outlets over the first nine months of the year, or almost 10 new stores every week across 45 separate countries. Its total store count now stands at 5,402 up to the end of October.
This included 79 new stores in China, taking its count to 250 across 42 cities. At the end of the third quarter the company said it had opened its first stores in South Africa, Taiwan and Azerbaijan, and would soon open outlets in Georgia and Peru.
Shares in Inditex, founded and still majority controlled by Amancio Ortega, Spain’s richest man, have hit all-time highs this year in spite of a large sell-off in the general market as the company has continued to show few severe signs of being affected by a sharp drop in consumer spending across Western Europe.
In Madrid, on Wednesday, shares were up more than 3 per cent in early trading at €63.63.
Inditex’s gross margin, a measure closely watched by investors and analysts anxious that rising costs have not shaved its profitability, was the company’s highest on record, increasing 100 basis points to 61.7 per cent compared to the third quarter in the previous year.
The company had previously pledged to investors to hold on to at least half of its gross margin gains from last year. By the third quarter all of its brands, which include Massimo Dutti, Pull&Bear, and Oysho, had launched online stores in Europe. The company does not yet split out its online sales.
Earnings before interest, taxation, depreciation and amortisation rose 5.8 per cent for the quarter from the year before to €956m, while net profit increased 6.4 per cent to €586m.
Earnings per share rose from €0.88 in the third quarter last year to €0.94.