UPDATE 3-Inditex sees pick up after tough first half
* First-half net profit 951 mln euros, beats forecast
* Gross margin slips to 58.6 pct of sales vs 59.6 pct
* Sales jump at start of third quarter
* Shares up 0.8 percent, hit record high (Adds more analyst comment, detail, background, shares)
By Sarah Morris
MADRID, Sept 18 (Reuters) - Inditex, the world's biggest clothing retailer, reported a pick up in sales on Wednesday, helping to ease concerns its rapid growth of recent years may be faltering after the smallest rise in first-half profit since 2009.
The owner of the Zara chain signalled it was not immune to cash-strapped European markets, where cut price competition combined with a cold Spring and foreign currency moves to drive down profit margins after a particularly strong 2012.
But analysts said the Spanish group's model of rapidly-changing fashion ranges remained among the best in the industry, and noted fast-growing Asian markets had overtaken Spain as its biggest source of sales for the first time.
"We continue to believe that Inditex will deliver double digit earnings growth in the medium term and can hold its multiple," Bernstein analysts said, referring to the company's shares, which trade at 25 times earnings forecasts for 2013 versus a sector average of 16, according to ThomsonReuters data.
At 1215 GMT, Inditex shares were up 0.8 percent at 111.1 euros, after hitting a record high of 112.6 euros.
Inditex, which owns eight brands including upmarket Massimo Dutti and teen label Bershka, said net profit rose 1 percent to 951 million euros ($1.3 billion) in the six months ended July.
That beat analysts' average forecast of 926 million euros, helped by tight control of costs and a lower tax rate.
The gross margin slipped to 58.6 percent of sales versus 59.6 percent the year before, likely hit by price reductions in austerity-hit southern Europe, higher raw material prices and currency effects, including a weaker yen. Inditex, with 6,104 stores in 86 markets, has more than 90 shops in Japan.
Arch-rival Hennes & Mauritz (H&M) said in June markdowns dragged down its gross margin in the second quarter.
However, Inditex said it expected gross margin to end the year broadly stable - 50 basis points higher or lower than what it considered to be an exceptional margin in 2012.
It also reported a pick-up in sales growth following a weak Spring season. While it didn't provide details on sales from stores open at least a year, Societe Generale analyst Anne Critchlow calculated they grew 3.3 percent in the three months ended July 31, up from just 0.5 percent in the first quarter.
They appeared to have accelerated to 4 percent in the first six weeks of the third quarter, she added.
"This is impressive as the prior year comparative for those weeks was a very strong 9 percent," said Critchlow.
On Monday, H&M also reported a 4 percent rise in like-for-likes sales for August, helped by more favourable weather conditions, its biggest rise in 11 months.
Highly cash generative and practically debt free, Inditex has driven sales and profits during a deep recession in its home market by expanding rapidly into fast-growing emerging markets.
Retail sales fell in Spain for the 37th straight month in July and the country still accounts for 19.3 percent of Inditex's sales, albeit down from 21.5 percent a year ago.
However, the group said on Wednesday sales in Asia, Australia and Africa had overtaken Spain to account for 21.7 percent of the total, up from 20.2 percent a year earlier.
Inditex's shares have tripled in value since Spain's economy imploded five years ago, although they have lost some of their lustre this year as investors bet on signs of recovery at other Spanish businesses and baulk at their rich valuation.
The stock has risen 4.4 percent this year, compared with a 10 percent rise in Spain's blue-chip index.
($1 = 0.7491 euros) (Additional reporting by Tracy Rucinski; Editing by David Holmes and Mark Potter)
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