By  on June 14, 2005

PARIS — Inditex, the Spanish retailer that runs the Zara chain, on Monday reported a 21 percent hike in first-quarter profit, but said like-for-like sales were flat in the first six weeks of the second quarter.

Net income in the three months through April 30 climbed to 125 million euros, or $163.3 million at average exchange, thanks to fewer markdowns and positive currency translations, Inditex said.

Operating income, or EBIT, grew 16 percent to 180 million euros, or $235.1 million, while EBITA, or operating cash flow, rose 18 percent to 260.9 million euros, or $340.8 million.

Sales advanced 19 percent to 1.41 billion euros, or $1.84 billion, spurred by new stores and favorable comparable-store sales, Inditex said.

The numbers were roughly in line with analysts' expectations, but Inditex's stock fell 6.6 percent in trading Monday to close at 21.60 euros, or $26.16, reacting to the soft start to the second quarter.

In the first quarter, the group opened 90 new units, including 21 new Zara boutiques, bringing the group's total store count to 2,334.

Inditex, which also runs the Bershka, Massimo Dutti, Pull & Bear and Oysho chains, among others, said it expected to open between 335 and 395 new units by yearend.

Zara, which accounts for roughly 70 percent of Inditex sales, had 744 stores at the end of the quarter.

Inditex said gross margin improved by 180 basis points in the period, thanks to few markdowns in February and positive currency translations.

In related news, Inditex said it had exercised an option to acquire the outstanding 9.95 percent of the fashion-forward Stradivarius clothing chain, which it now owns completely.

The firm also announced Pablo Isla would become chief executive officer, succeeding Jose Maria Castellano. Amancio Ortega, Inditex's founder, remains chairman.

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