Zara owner posts profit jump on back of Asian expansion
Spain's Inditex, the world's biggest clothing retailer, posted Wednesday a 68-percent rise in first half net profit as its aggressive expansion abroad, especially in Asia, paid off.
The Zara-owner reported a better-than-expected net profit for the six months to July of 628 million euros (825 million dollars), up from 374.8 million euros during the same time last year.
Analysts polled by Dow Jones Newswires had expected a first half net profit of 573.2 million euros.
Inditex, whose other brands include youth label Bershka and the upmarket Massimo Dutti, posted sales of 5.53 billion euros, up 14 percent.
The company reduced its reliance on its domestic market Spain, which is struggling to emerge from its worst recession in decades, while Asian and other European markets expanded thanks to a rapid pace of new store openings.
Spain accounted for 28 percent of store sales during the period compared with 32 percent a year earlier while Asian markets contributed 15 percent, up from 12 percent.
Other European countries accounted for 45 percent, against 44 percent last year.
Inditex opened 173 stores in 37 countries during the six months period, including its first ones in fast-growing India, bringing its worldwide total to 4,780 in 77 countries at the end of July.
Inditex expects Asia will account for nearly half of its new store openings in coming years.
"China is the most important country for Inditex in Asia and we are planning to increase our presence in Japan, South Korea and India as well as in other Asian nations," Inditex chief executive Pablo Isla told a conference call with analysts.
The company opened three Zara stores in Delhi and Mumbai during the second quarter and Isla said it plans outlets in other Indian cities over the coming years.
Isla said the response to the start of online sales for its flagship Zara brand earlier this month in Britain, France, Germany, Italy, Portugal and Spain has been "very satisfactory."
The company plans to extend online sales to a further five European countries -- Austria, Ireland, the Netherlands, Belgium and Luxembourg -- in the second half of this year, before launching in the United States, Canada, Japan and South Korea next year, he added.
Inditex plans to eventually start selling its other brands such as Bershka, Oysho and Massimo Dutti, online as well.
© 2010 AFP