Profits jump at Zara owner Inditex

Spanish retail giant Inditex reported better-than-expected interim profits on Wednesday, on the back of strong global demand.

The Zara owner said net income rose 40.1% in the first six months of the year to €2.5bn. Analysts had been expecting net income closer to €2.38bn.

Sales grew 13.5% to €16.9bn, while earnings before interest, tax, depreciation and amortisation jumped 15.7% to €4.7bn.

Inditex, which also owns Pull & Bear, Massimo Dutti and Bershka, among other brands, said sales had been positive across geographical areas and all concepts. The retailer has stores in more than 90 countries.

Oscar Garcia Maceiras, chief executive, added: "The first-half results demonstrate that the talent of our teams continues to consolidate the improvements in the performance of our business model."

Looking to the second half, Inditex said store and online sales between 1 August and 11 September were up 14% compared to the same period a year earlier, with autumn/winter collections "very well received" by customers.

But it also flagged that, based on current exchange rates, it expected currencies to have a -3.5% impact on sales in the full-year, worse than the -2.5% previously forecast.

Victoria Scholar, head of investment at Interactive Investor, said: "Inditex continues to deliver strong sales despite a weakening consumer, a trimmed down store estate and higher prices, which have allowed the business to preserve margins in the face of inflationary cost pressures.

"However, a stronger euro is a key headwind to watch, resulting in larger downward FX impact than expected, weighing on shares. Other concerns for the second half include the potential for weaker consumer demand and lower prices, which could negatively impact earnings."

Shares in Inditex, which have put on 35% so far this year, were off 4% as at 1030 BST.