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Business News

Zara owner targets China after profits soar in 2010

Inditex, the world's largest clothing retailer, is to accelerate its opening programme in China this year after the group grew annual profits by nearly a third in 2010.

The Spanish fashion group, which owns the Zara brand and now operates in 77 countries, opened 75 stores in China for the year to 31 January, including 45 Bershka, Pull and Bear and Stradivarius shops. The fashion group also opened a flagship Massimo Dutti shop in Shanghai, and plans to have stores in 42 Chinese cities by the end of this year, up from 30 in 2010.

Pablo Isla, the chief executive of Inditex, which plans to open the doors on 120 Chinese stores this year, said: "2011 will be a year of strong acceleration in China." Mr Isla will become chairman of the group later this year, taking over from founder Amancio Ortega. He made his comments as Inditex, which has more than 5,000 stores globally, including in the UK, grew its annual net profit by 32 per cent to €1.73bn (£1.5bn), boosted by an uplift in its margins in the year to the end of January.

The company also allayed worries about cost pressures, saying that it expected keep half the margin gains it has made in the past year.

Over the year, Inditex opened 437 stores in 45 countries, but this year will open up to 500 new outlets. In 2010, Inditex made its debut in India, Kazakhstan and Bulgaria.

The group described the response from customers in India as "extraordinary", which has convinced it to open stores in Delhi, Mumbai, Bangalore and other Indian cities this year. Inditex described its expansion of 160 shops last year in Asia as "rapid" and sales on the continent now account for 15 per cent of group sales. On a like-for-like basis on stores open at least a year, Inditex grew sales by 3 per cent, compared to it being flat the previous year.

Zara introduced its first online stores in Europe, including in the UK, in September and will launch on the web in the US and Japan this year. It plans to have all its brands online by the end of the year. While Inditex is best known for Zara in the UK, it is looking expand its Pull and Bear and Bershka stores here this year.