PARIS — Same-store sales declines and unfavorable currency translation joined forces to pressure down the profits of Inditex Group, the Spanish fashion retailer that operates the Zara fast-fashion chain.

For the three months ended Oct. 31, net income fell 9.2 percent to $169.5 million from $186.7 million in the year-earlier period. The numbers were slightly below analysts’ expectations.

Sales in the quarter increased 11.1 percent to $1.49 billion from $1.34 billion.

Dollar figures have been converted from the euro at current exchange as Inditex reported net income of 138.9 million euros on sales of 1.22 billion euros.

Gross margin dropped 250 basis points to 52.2 percent of sales.

Inditex said unit sales in the period from August to November increased about 26 percent, twice the rate of sales growth in constant currencies, but that the average selling price dropped 10 percent because of changes in the fashion mix rather than “discounting activity or changes in price architecture.”

International sales accounted for 53.8 percent of the total, versus 53.4 percent a year ago. Inditex enjoyed its largest increases in both sales and profits in Europe outside of its home market of Spain, where sales increased 22 percent. In the Americas, they dropped 12.4 percent because of currency fluctuations and accounted for 12.4 percent of the corporate total versus 14.2 percent a year ago.

Inventories rose 3.7 percent to $719.7 million from their year-ago level.

Inditex, which also operates the Pull & Bear, Massimo Dutti, Kiddy’s Class and Stradivarius chains, said it expects to have opened 380 new stores by the end of 2003.

Through the nine months, net income was up 3.8 percent to $347.7 million, or 284.6 million euros. Gross margin declined to 50.8 percent of sales from 52.6 percent in the like 2002 period. Through the nine months, sales were up 16 percent to $3.9 billion, or 3.2 billion euros.

At constant currency rates, sales through the end of the third quarter grew 20 percent, Inditex said.

To continue reading this article...

To Read the Full Article

Tap into our Global Network

Of Industry Leaders and Designers

load comments
blog comments powered by Disqus