Zara sees profits rise by 63 per cent
Thursday 10 June 2010
Inditex, the owner of the Zara fashion chain, posted a forecast-beating 63 per cent jump in quarterly net profit yesterday as its fast-to-market business model helped it to respond quickly to an upswing in demand.
The world's biggest clothing retailer by revenue returned to double-digit sales growth in the first quarter as demand picked up after almost two years of recession, with shoppers snapping up items including oversized graphic T-shirts and harem pants.
Profits, sales and gross margin all beat forecasts, driven by positive currency effects and the proximity of Inditex's factories, which allows quick replacement of high-turnover items.
The cash-rich company has picked up market share in its home market, Spain, which accounts for a third of sales, during an economic downturn in which many smaller clothing stores have gone out of business.
Inditex, which opened its first Zara store in India in May, has also expanded aggressively into the savings-rich economies of the Middle East and Asia, reducing its exposure to sluggish Spanish consumer demand.
First-quarter net profits hit €301m (£249m), on sales up 14 per cent at €2.67bn.
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