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Inditex Posts Sharp Sales and Earnings Gains in Q1

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Spain-based apparel giant Industria de Diseño Textil, S.A., better known as Inditex (ITX.MC), announced strong sales and earnings gains for the first fiscal quarter ended April 30, helped by the weak euro, recovering economy in Europe—particularly in the south—and rapid store expansion. Shares in the company edged down 0.5% Wednesday on the Madrid Stock Exchange.

Sales at the parent company of the Zara fashion chains increased by 17 percent on a reported basis to 4.37 billion euros ($4.94 billion), from 3.75 billion euros in the prior year. Net sales on a constant currency basis increased by 13.5%.

Gross margin expanded by 50 basis points to 59.4% of net sales.

Net profit increased by 28 percent to 521 million euros ($589 million) from 406 million euros in the prior year’s first quarter, exceeding Wall Street estimates of 405 million euros.

At the end of the first quarter, the group had 6,746 brick-and-mortar stores in 88 markets, having opened 63 net new stores in 27 different markets during the period. Some of the most noteworthy openings included new Zara stores in London (Oxford Street) and refurbished and enlarged stores in Tokyo, Belfast, Tel Aviv, Montevideo, New York and Copenhagen. Since the end of the first quarter, Zara also opened new stores in China, Russia and Germany.

The group’s other chains opened high-profile stores like Pull & Bear in Shanghai, Stradivarius in Madrid and Mexico City, Oysho in Barcelona, Moscow and Lublin (Poland), and Zara Home in Australia and Chile. Uterqüe opened a new flagship in Madrid.

Inditex also opened new branded online operations in the 27 markets in which it already has an e-commerce presence.

A special profit sharing plan has been approved under which employees will participate in Inditex’s earnings growth in 2015-2016. All employees of the company’s stores, manufacturing and logistics operations, retail chains and subsidiaries around the world who have been employed for more than two years will be eligible to participate. The Group will award these beneficiaries 10 percent of the year-on-year growth in profit attributable to the parent company up to a cap of 2 percent of total consolidated profit.

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