* Q1 net 432 million euros vs f'cast 383.4 million
* Sales 3.4 bln euros vs f'cast 3.3 bln
* New markets fuels growth
* Takes market share in Europe
(Adds detail, analysts, share reaction)
By Sarah Morris
MADRID, June 13 Spain's Inditex SA, the
world's largest clothes retailer, bucked Europe's financial
crisis with a sharp rise in quarterly earnings by pleasing
fashion-hungry shoppers in Asia and cash-strapped consumers on
its home continent.
The owner of Zara stores and seven other brands including
upmarket Massimo Dutti beat forecasts on Wednesday with a 30
percent rise in first-quarter net profit to 432 million euros
($538 million) and sales of 3.4 billion. A Reuters poll had
forecast net profit of 383.4 million euros and sales of 3.3
"When you think of what is going on with the euro crisis,
it's amazing," said Societe Generale analyst Anne Critchlow. "It
highlights the lack of Inditex's reliance on southern Europe."
At 0937 GMT Inditex shares were up 8.02 percent at 73 euros,
making it the most valuable company on the Spanish stock
exchange, overtaking established heavyweights Telefonica
and Banco Santander.
Inditex, which runs more than 5,600 stores across 84
markets, still makes about a quarter of sales in its home
country and three-quarters in Europe, but Societe Generale
estimates this year it will reduce its sales in Spain to about
22 percent, increasing those from emerging markets such as China
to 45 percent.
Inditex opened 91 new stores between February and April,
with a new store every three days in China, where it will launch
its flagship Zara label online in September.
Back in Europe, there are signs Spain's largest listed
retailer is taking market share from more expensive rivals
through its fast production model, which allows it to get new
designs into stores within two weeks if necessary.
Inditex's fortunes are in stark contrast to those of rival
Esprit Holdings, which makes about 80 percent of its
sales in Europe. Esprit is in the middle of a restructuring plan
to revive a brand it said last year had "lost its soul", a task
made harder on Wednesday when its chief executive
Like-for-like sales at Swedish competitor Hennes & Mauritz
are expected to have fallen 1 percent in May, according
to a Reuters poll, after the firm posted its worst figures for
more than two years in April.
Some analysts estimated Inditex's like-for-like sales, which
strip out new stores, rose 5-6 percent in the quarter, and the
trend continued into the first six weeks of the second quarter
since the company said sales in constant currency climbed 14
percent from Feb. 1 to June 10.
Spending in austerity-wracked Europe is being curbed by high
employment, salary cuts and VAT hikes. Spanish retail sales fell
9.8 percent in April, the 22nd month in a row of falls and a
record since data was kept in 2003.
Consumer confidence is being further hit by continuing
uncertainty in the euro zone pending Greek elections that could
lead to its leaving the currency union and doubts about whether
a bailout of up to 100 billion euros to Spain's banks will be
On a conference call, Inditex Chairman and Chief Executive
Pablo Isla declined to give further details of individual market
performance but expressed his confidence in reforms undertaken
in Spain to control public finances, especially in the regions.
The firm has started a 70,000 square-metre extension to its
Galician headquarters in northern Spain, costing 100 million
euros and creating 400 new jobs.
"I would say that I have full confidence in the future of
the Spanish economy, and I firmly believe that the effect of the
reforms being adopted will start to become evident in the coming
quarters," Isla said.
While the blue-chip Ibex-35 index has shed about a
quarter of its value this year as investors take a wary view of
Spain, Inditex shares have risen by 6.6 percent.
($1 = 0.8028 euros)
(Editing by Will Waterman)