PARIS — Inditex, the Spanish retailer that runs the Zara fashion chain, on Tuesday reported better-than-expected gains in third-quarter net income, highlighting the resilience of its fast-fashion model in a tepid retail environment in Europe.
Net income in the three months through October rose 26 percent to 274 million euros, or $329.8 million, Inditex said. Sales increased 20 percent to 1.83 billion euros, or $2.2 billion, driven by aggressive shop openings in Europe. Through the nine months, sales increased 20 percent to 4.65 million euros, or $5.6 billion. Dollar figures are at the average exchange rate.
Pablo Isla, the firm's deputy chairman and chief executive, said on a conference call that the results were "satisfactory in a challenging retail environment." Isla said sales in the first six weeks of the fourth quarter were "in line" with expectations.
Retailers across Europe have suffered this fall from unusually warm weather and weak consumer confidence. Fast-fashion players such as Inditex and Sweden's Hennes & Mauritz, though, largely have outperformed the sector. Analysts expect H&M to report double-digit sales gains for November on Dec. 15.
Lehman Bros., in a note to investors, said Inditex's performance "attests to the strength of [its] fast-fashion model and position."
Since the beginning of the year, Inditex has opened 323 stores. Close to 100 stores bowed in the last month alone, bringing Inditex's total to 2,643 at the end of November. Isla said Inditex was on track to open almost 450 stores by the end of its fiscal year.
Inditex plans to open another 450 stores next year, including "three or four" stores in China, the company's first in that fast-growing market. Isla said Inditex's "main focus" remained Europe, followed by strategic growth in Asia. He said the group would continue to add "a few" stores a year in the U.S.
Zara, which accounts for roughly 65 percent of Inditex sales, opened 93 stores in the third quarter, bringing its total to 816 units. Inditex also runs the Kiddy's Class, Pull and Bear, Massimo Dutti, Bershka, Stradivarius, Oysho and Zara Home chains.
Shares of Inditex finished trading on the Madrid Bourse down 0.5 percent at 25.65 euros, or $30.61 at the current exchange.
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