PARIS — Inditex, the Spanish fashion retailer that operates the Zara fast-fashion chain, last week reported a 20.9 percent increase in first-half net income, but said sales in the first seven weeks of the third quarter had been slower than expected.
While results were broadly in line with analysts’ expectations, Inditex shares fell 12.8 percent, closing at $22.31, or 19.92 euros, in trading Friday on the Bolsa de Madrid stock exchange.
Investors reacted to the conservative guidance Inditex gave on gross margins for the remainder of the year. It said a move to homogenize pricing across Europe and larger-than-expected negative currency effects, especially in Mexico, would weigh on profits.
Net income for the six months ended July 31 rose to $163.6 million from $135.3 million last year. Dollar figures have been converted from the euro at current exchange as Inditex reported net income of 146.1 million euros versus 120.8 million euros during the first half of 2002.
Bolstered by 137 store openings, sales in the period increased 19.2 percent to $2.22 billion, or 1.98 billion euros, from $1.86 billion, or 1.66 billion euros. Same-store sales increased 6.5 percent, and revenues at constant currency were up 25 percent.
Inditex has been hurt by unusually hot weather in Europe. The firm said although the number of units sold has increased, monetary sales were down as customers flocked to low-ticket items such as T-shirts instead of more expensive coats and sweaters.
The firm is also up against robust sales comparisons from the second half of last year, when same-store sales tracked at a double-digit pace. Inditex expects the trend to improve in the second half, especially during the fourth quarter.
At Zara, first-half revenue increased 14.2 percent to $1.57 billion, or 1.41 billion euros. Zara opened 30 new units in the first six months, bringing the chain to 561. Zara accounted for 71.1 percent of group sales, as opposed to 74.2 percent during the first half of 2002.
Bershka, the fast-fashion junior chain with 225 stores, bolstered sales 53.6 percent to $188.7 million, or 168.5 million euros. Meanwhile, the recently launched Oysho lingerie chain increased sales 132.6 percent to $22.4 million, or 20 million euros.
Inditex also operates the Pull & Bear, Massimo Dutti, Kiddy’s Class and Stradivarius chains.
Inditex predicted that trading would improve over the end of the year as weather cools.