Zara owner eyes Asia expansion after profit jump
Spain's Inditex, the world's largest fashion retailer and owner of the Zara brand, announced Tuesday bumper 2010 profits and revealed plans to broaden its rapid Asian expansion across China and India.
Asia was the fastest growing revenue source in the year ending January 31, 2011, a period in which overall net profit leapt 33 percent to 1.73 billion euros ($2.46 billion), Inditex said in a statement.
Sales surged 13 percent to 12.53 billion euros.
The result beat most market analysts' expectations and sent Inditex shares surging 4.11 percent to 56.22 euros by mid-morning on an otherwise flat Madrid stock market.
Spain and the rest of the Europe accounted for nearly three-quarters of Inditex's worldwide sales.
But the share from the Americas grew to 12 percent of global sales from 10 percent the year before.
And Asia's share expanded to 15 percent from 12 percent.
"Our priority remains to focus our growth in Europe and Asia," said Inditex chief executive Pablo Isa, who took over the post in July from the group's founder, Amancio Ortega, one of Spain's richest men.
"We see India as a relevant source of growth for Inditex in the medium term," he added in a telephone conference.
"Asia should continue gaining around three percentage points per year in terms of its contribution to sales"
In 2011, Inditex said it planned to open 460-500 new stores, entering new markets in Australia and South Africa as well as launching online Zara stores in both Japan and the United States.
The group, whose other brands also include youth label Bershka and the upmarket Massimo Dutti, said it opened its first Zara store in India last year to an "extraordinary welcome from customers" and it plans more launches this year in Delhi, Mumbai, Bangalore and other cities.
In China, it opened 75 stores in 30 cities and planned to expand to cover 42 cities this year.
Analysts at Banco Santander issued a report noting the group's good fourth quarter.
Barclays Capital researchers said Inditex had also made a "good start" to 2011 with sales in local currency terms up 10 percent from February 1 to March 14 compared to a year earlier.
© 2011 AFP