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Europe Watch: Bloc Party … French Pinch … German Blues

<B>BLOC PARTY:</B> Zara is boosting its presence in Eastern Europe. The Spanish fast-fashion chain, part of the Inditex retail group, said it opened a 20,000-square-foot flagship in Budapest on Friday, a week after opening its first store in the...

BLOC PARTY: Zara is boosting its presence in Eastern Europe. The Spanish fast-fashion chain, part of the Inditex retail group, said it opened a 20,000-square-foot flagship in Budapest on Friday, a week after opening its first store in the Hungarian capital. Meanwhile, next Friday the chain plans to open its first boutique in Lithuania, in the capital of Vilnius. Zara has been making a concentrated push into the former Communist bloc. It recently opened units in the Czech Republic, Slovenia and Slovakia.

FRENCH PINCH: The French spent 1.4 percent less on clothes in September compared with a year ago, according to a study by the Institut Français de la Mode. The hardest hit were hypermarket operators; sales fell 9.2 percent in chains such as Carrefour and Auchan. Sales at fast-fashion stores dipped 2.3 percent in the month and sales fell 1.1 percent among independent retailers. But not everyone lost. Clothing sales at French department stores rose 5.6 percent.

GERMAN BLUES: It’s not getting any better in Germany, either. Apparel sales in the country contracted 2 to 3 percent in the first 10 months of the year, according to the German Apparel Retailers Association, BTE. Sales were down 5 percent in the same period a year ago, and retailers are worried. “Germans fear for the future,” explained Klaus Magnus, president of BTE. “They buy less.” Some are expecting a wave of consolidation as major chains, such as Karstadt, have fallen on hard times.

KarstadtQuelle Group reported huge third-quarter losses last Wednesday and adjusted its full-year forecast further downward. Third-quarter EBTA dived to a loss of 1.1 billion euros, or $1.4 billion. KarstadtQuelle pointed out that quarterly earnings were especially hard hit by special one-off factors related to the restructuring and realignment of the group. After adjusting for these special factors, EBTA for the quarter amounted to a loss of 31.1 million euros, or $39.5 million, versus 31.4 million euros, or $39.9 million, in the same period in 2003.

The firm is projecting an operating loss of 280 million to 295 million euros, or $355.6 million to $374.7 million, for 2004. Group sales are expected to fall 7 percent, compared with the 4.5 to 5 percent dip previously forecast. — Melissa Drier

This story first appeared in the November 8, 2004 issue of WWD.  Subscribe Today.