Europe's biggest clothing retailer, Inditex, showed strong sales growth for 2010 so far

Europe's biggest clothing retailer Inditex showed strong sales growth for 2010 so far, pushing its shares higher, as its fast-to-market business model allowed it to respond quickly to an uptick in demand. Zara-owner Inditex reported a 5 percent rise in net profit for 2009 on...

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 E-mail article  Print  Save Additional News in English Još vesti na Srpskom Επιπλέον ειδήσεις στα Ελληνικά  Text

Europe's biggest clothing retailer, Inditex, showed strong sales growth for 2010 so far



Sonya Dowsett in Madrid - 17.03.2010

Europe's biggest clothing retailer Inditex showed strong sales growth for 2010 so far, pushing its shares higher, as its fast-to-market business model allowed it to respond quickly to an uptick in demand. Zara-owner Inditex reported a 5 percent rise in net profit for 2009 on Wednesday, beating analysts' forecasts, while sales at constant exchange rates rose 14 percent since the start of the company's financial year on Feb. 1.

"The big thing about these results is that suddenly you've got like-for-like sales popping back into positive territory," said Anne Critchlow, analyst at Societe Generale.

Shares rose over 3 percent at market open before losing ground to trade 2.8 percent higher at 48.2 euros by 0903 GMT on an index up 0.3 percent. Inditex trades at 23 times estimated 2010 earnings, more expensive than arch rival, Sweden's H&M, which trades at 20.77 times 2010 earnings, according to Reuters data.

Critchlow estimated like-for-like sales growth of 6 percent in the fourth quarter and up to 5 percent growth in the first six weeks of the new financial year, against a 3 percent drop in the third quarter.

 

SPECIAL DIVIDEND

Inditex does not break out like-for-like sales. The company, whose other brands include youth label Bershka and homewares store Zara Home, is opening more than a store a day with more than 40 percent of new store space in 2010 slated for Asia.

Retailers worldwide are seeing improved demand after a grim economic slowdown.

H&M posted forecast-beating fourth-quarter results earlier this year as a pick-up in retail spending helped to reverse a trend of declining sales, and got 2010 off to a good start.

Germany's Metro, the world's third-biggest retailer, lifted its mid-term earnings target on Wednesday and said it expects results to improve this year on the back of further expansion in Eastern Europe and Asia.

Inditex's fast-fashion business model that speeds catwalk designs to its stores worldwide allowed it to respond quickly to recovering demand, Critchlow said.

Although a third of Inditex's sales come from Spain, one of the few major economies still in recession, analysts believe it is gaining market share on its home ground as smaller, independent retailers go bust.

Inditex said it would pay a special dividend of 0.10 euros per share on Nov. 2 this year, less than the 0.25 euros per share expected by Deutsche.

"Most people would have expected a slightly bigger dividend," said Fraser Ramzan, analyst at Nomura. 

Source: Reuters; Balkans.com 


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