Inditex, the Spanish fast-fashion conglomerate that runs the Zara chain, on Wednesday outpaced market expectations for the ninth consecutive quarter as it reported a 30 percent hike in fourth-quarter profit, driven by aggressive store openings in...
PARIS — Inditex, the Spanish fast-fashion conglomerate that runs the Zara chain, on Wednesday outpaced market expectations for the ninth consecutive quarter as it reported a 30 percent hike in fourth-quarter profit, driven by aggressive store openings in France, Spain and Italy.
Net income in the three months through Jan. 31 improved to 368 million euros, or $479 million, from 283 million euros, or $354 million, a year ago, eclipsing analysts' consensus targets. Dollar figures are at the average exchange rate.
In spending more than 1 billion euros, or about $1.3 billion, to open 439 stores last year, Inditex inaugurated more than a store per day.
The company said it would invest another 850 million to 950 million euros, or $1.1 billion to $1.2 billion, this year as it bulks up in the competitive European fast-fashion market, where it goes head-to-head with Sweden's Hennes & Mauritz and Spain's Mango chains.
"There was strong growth in 2006 due to ongoing expansion," said Inditex chief executive officer Pablo Isla in a meeting with analysts and reporters broadcast over the Internet.
Isla said sales in February and early March started positively, but cautioned that sales over the Easter season would determine the quarter's outcome. Inditex's like-for-like sales improved 5.5 percent last year, according to Isla, who added that Europe and Spain were the chain's fastest-growing markets.
Inditex, which also operates the Massimo Dutti, Pull and Bear, Bershka, Oysho, Stradivarius, Kiddy's Class and Zara Home chains, had 3,131 shops at the end of January.
Last year the company opened its first stores in mainland China and entered the Serbian and Tunisian markets. Inditex runs stores in 64 countries.
Isla said Zara's first stores in China had performed exceptionally and promised continued store introductions in that market, especially around Beijing, Shanghai and Hong Kong, as well as elsewhere in Asia, where the potential for expansion was "huge."
"[Inditex] is still at a very early stage of international development," said Isla, adding that the company planned to open 440 to 520 stores in 2007, with 80 percent of those units located outside Spain.As for America, Isla reiterated Inditex's more conservative strategy to open eight to 12 stores each year in the U.S., concentrated on the West Coast and in and around New York and Miami.
Italy, where Zara just opened its 100th store, is another major growth opportunity, said Isla. He added that Germany, which has suffered tepid consumer spending, showed signs of improvement.
For the year, Inditex said net income grew 25 percent to 1 billion euros, or $1.3 billion, from 803 million euros, or $1.2 billion, last year. Net sales grew 22 percent to 8.2 billion euros, or $10.7 billion, from 6.74 billion euros, or $8.4 billion, a year ago.
The company said store sales in Europe for the first time exceeded those in Spain, with the firm's international stores accounting for more than 60 percent of total sales.
By concept, Zara, which, with 990 stores, last year made 65.3 percent of Inditex's total sales, continued on an upward thrust. Its full-year sales gained 21 percent to 5.35 billion euros, or $6.9 billion, as EBIT grew 24 percent to 880 million euros, or $1.1 billion.
All of Inditex's other chains logged double-digit sales growth. Sales at the Oysho lingerie chain, with 201 stores, leapt 54 percent to 165 million euros, or $212 million, with a 59 percent gain in EBIT to 39 million euros, or $50 million.
Sales at Bershka, the 433-store, teen-oriented chain, gained 25 percent to 798 million euros, or $1 billion, with EBIT up 33 percent to 131 million euros, or $168 million.
Zara Home, launched three years ago and now with 152 stores, logged a 78 percent sales gain to 139 million euros, or $177 million, as EBIT improved 1.1 percent to 18 million euros, or $23 million.
Sales at Massimo Dutti, with 399 stores, advanced 15 percent to 614 million euros, or $781 million, with an EBIT gain of 17 percent to 81 million euros, or $103 million.
Stradivarius, with 304 stores, saw sales grow 25 percent to 428 million euros, or $545 million, with EBIT improving 17 percent to 98 million euros, or $125 million.The 467-store Pull and Bear's sales advanced 17 percent to 182 million euros, or $232 million with EBIT gaining 8 percent to 31 million euros, or $39 million. And sales at Kiddy's Class, with 185 stores, grew 17 percent to 182 million euros, or $231 million, with an EBIT gain of 8 percent to 31 million euros, or $39 million.
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