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Inditex Delivers YTD Sales and Earnings Gain, Reports Accelerating Holiday Sales

Inditex, owner of the Zara, Pull and Bear, Uturqüe and other fashion brands, reported sales and profit that beat expectations for the first three quarters of the fiscal year, and said that holiday apparel sales have been accelerating.

The Arteixo, Spain-based retailer, which is credited with having invested and perfected the “fast fashion” business model in which it delivers new designs to its stores within the shortest lead times in the industry, said that net profit rose to $2.1 billion, or 1.69 billion euros, in the nine months ended Oct. 31, up 1 percent compared to the year-earlier period, on a 7 percent revenue increase to $15.8 billion. In constant currency terms, sales were up 10.5%. Both sales and earnings results exceeded analysts’ expectations.

Sales from the first week of November through the first week of December accelerated compared to earlier in the year, rising by 14 percent on a local currency basis versus a 10.5% growth rate in the first nine months.

Gross margin declined one percentage point to 58.9% in the period, hurt by the impact of weakening currencies in some of its markets outside the Euro zone, like Russia.

Inditex has opened 230 stores so far this year, including two Zara stores in the U.S. (California and Virginia), bringing its total to 6,570 stores in 88 countries on five continents. During the quarter, the company launched online stores for Zara in Mexico and South Korea, and now has e-commerce presence in 27 countries.

The company also announced that its implementation of RFID inventory-management technology is proceeding on schedule, and will be fully operational in 1,000 Zara stores (including most concept stores in Europe and the U.S.) by the end of this year, and in all Zara stores by 2016. The system will allow Zara to further enhance the customer offering by improving data transmission between stores and distribution centers and improving the availability of merchandise on the selling floor.