Zara owner Inditex profit rises

Inditex, Europe's largest clothes retailer, said it sees "no significant risks or uncertainties" for its second half after profit edged up in the first, bucking a sharp consumer slowdown at home in Spain. The group, which runs the Zara chain and opens its 4,000th store in Tokyo on Sunday, said on Wednesday net profit rose 3 percent to 406 million euros ($576 million) in the six months ended July, with sales up 11 percent at 4.56 billion.
Eleven analysts polled by Reuters had on average forecast net profit of 416 million euros on sales of 4.55 billion. Inditex, which is running neck-and-neck with US-based Gap Inc for the title of the world's largest clothing retailer, said its autumn-winter collection was being well received and growth for the first six weeks of the second half was similar to the first. "Inditex has beaten the bears today and posted a solid performance for the first half," said Exane analyst Phil Rudman.
At 0900 GMT Inditex shares, which had dipped in the run-up to the results, were up 1.7 percent at 29.27 euros, beating a 0.5 percent rise on the DJ Stoxx European retail index. Inditex invented what became known as "fast fashion", getting cat-walk trends quickly into its stores at knock-down prices.
At a Zara store in Madrid, the latest collection included cashmere cardigans in autumn colours, silk, collarless blouses and wool jackets in greys and blues, all for about 60 euros a piece. But some analysts said Wednesday's results showed disappointing growth in the early weeks of the second half against easier comparatives from the same time last year.
"The question is whether Inditex can pull it together in the second half," said Tony Shiret, an analyst at Credit Suisse. "It all depends on how long Spain's economic downturn lasts. It could go on for years, so there will be more muted growth."
Retailers across Europe are struggling as shoppers curb spending amid higher fuel prices and economic uncertainty, though larger groups like Inditex and Swedish rival Hennes & Mauritz are faring better than independents. Euro zone retail sales fell 2.8 percent in July versus the same month the year before, while sales in Spain plunged 6 percent, hit by a housing market slump.