Money: Zara owner Inditex shakes off currency drag to post strong profit growth - PressFrom - United Kingdom
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MoneyZara owner Inditex shakes off currency drag to post strong profit growth

16:20  12 june  2019
16:20  12 june  2019 Source:   reuters.com

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Inditex , the owner of fashion brand Zara , reported an uptick in revenue and profits in the first half of of the year in spite of negative currency effects from a stronger euro. The world's largest clothing retailer by sales reported sales up 3 per cent to €12bn in the first six months of the year and net profits also

Zara - owner Inditex , the biggest fashion retailer in the world, has posted its weakest profit growth in four years. Net profit between February and April was Rival Hennes & Mauritz also cited weak sales in the region when it posted flat sales in May. Along with the cold weather, Inditex blamed currency

Zara owner Inditex shakes off currency drag to post strong profit growth © Reuters/Susana Vera FILE PHOTO: The logo of a Zara store, an Inditex brand, is seen in central Madrid

Spanish fashion group Inditex reported a 10% rise in first-quarter profit on Wednesday, as foreign currency effects moved back into favour for the owner of Zara and Massimo Dutti after two years of nibbling away at margins.

However, sales growth at the world's biggest clothing retailer was lower than analysts expected during the quarter due to adverse weather conditions in the latter part of the period when it was wet and cold across much of southern Europe.

The world's biggest clothing retailer reported net profit of 734 million euros (£654 million) for the three months from Feb. 1 to April. 30, on sales up 5% at 5.93 billion euros.

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Inditex , the world's biggest clothing retailer, reported strong sales growth for the first five weeks of Rival H&M (HMb.ST) saw sales rise just 7 percent in January in local currencies and warned that Inditex beat Societe Generale’s forecast of 12 percent sales growth . Analyst Anne Critchlow said it

Double-digit growth in online sales helped Inditex , the owner of the Zara fashion brand, report on Wednesday a jump in profits in spite of the negative effect of currency headwinds which weighed on margins.

Sales at constant exchange rates for the first six weeks of the second quarter were stronger, up 9.5% as shoppers snapped up items like jewel-toned blazers and long printed dresses from Zara's spring collections.

Inditex maintained its full-year guidance of 4-6% growth for like-for-like sales.

RBC Capital Markets estimated it had booked like-for-like currencies of around 6.5% during the first weeks of the second quarter, against around 2% in the first quarter.

Zara owner Inditex shakes off currency drag to post strong profit growth © Reuters/Brendan McDermid FILE PHOTO: People shop at a Zara store during the grand opening of The Hudson Yards development in New York Inditex generates over half of its sales in other currencies that have to be converted back into euros for the financial report. Those currencies have strengthened slightly against the euro compared to a year ago, on average, helping reported sales.

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A stronger euro took its toll on Spanish retailer Inditex in its latest quarter, leading to lower profit margins at the owner of clothing chain Zara , while a But its shares bounced back from early losses on Wednesday, as investors cheered strong online sales growth and Chief Executive Pablo Isla said

The world's biggest clothing retail group Inditex , owner of fashion chain Zara , today reported a 3% rise in first-half profit and a rise in gross margin despite a stronger euro. Inditex 's profits are sensitive to fluctuations in the euro.

Societe Generale and Credit Suisse estimated sales at Inditex were reduced 3.5% last year by this effect, moving to a positive effect this quarter.

Gross margin grew 6% on year to 59.5% in the quarter in which Inditex launched online sales for Zara in Brazil. Zara will launch online sales in a further eight markets in May, including Israel, Saudi Arabia and Indonesia.

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With the adverse foreign exchange effects removed, Inditex is under pressure to show it can deliver strong like-for-like sales without the margin dilution that has affected others in the apparel sector, plagued by out-of-season sales as shoppers wait for discounts or hunt for bargains online.

"With less impact from foreign exchange, this will be an important year to prove the concept," said UBS in a research note.

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