* 9mo net 1.67 bln euros vs forecast 1.67 billion
* EBITDA 2.78 bln euros on sales of 11.93 bln, also in line
* Pre-xmas trading up 10 pct
* To open net 325 stores this year vs guidance of 440-480
* Shares up 0.9 pct
By Sarah Morris
MADRID, Dec 11 Zara owner Inditex, the
world's largest clothing retailer, showed signs of leaving
behind months of tepid sales growth as a budding European
recovery boosted pre-Christmas trading and it said global
expansion plans remained on track.
Inditex, which also operates brands including teen label
Bershka and upmarket Massimo Dutti, has struggled this year to
match a sparkling 2012, when its ability to push out small
collections using a slick supply chain proved particularly
The company said on Wednesday net profit in the nine months
through October was flat, but sales growth had accelerated to 10
percent in the first six weeks of the fourth quarter, the run-up
to Christmas, from 8 percent in the first nine months.
The final quarter is the most important of the year for
retailers and Inditex made 29 percent of its sales in the final
three months of 2012. Retailers as a whole are hoping for a
better Christmas this year as Europe and especially home country
Spain shows signs of recovery.
The operator of 6,249 stores globally, Inditex said it would
add between 8 percent and 10 percent of net new selling space in
2013, despite a strategy to shut smaller stores while opening or
refurbishing larger outlets in the world's busiest streets like
Fifth Avenue in New York.
It said it would open a net 325 stores this year, down from
earlier guidance of between 440 and 480, but said its expansion
efforts were going as planned.
"Globally space growth is on track, this is a year of strong
activity ... Most of the sales of these small stores will be
absorbed in these larger flagship stores," Inditex Chairman
Pablo Isla told analysts on a conference call.
Closest global rival Hennes & Mauritz, which opened
its 3,000th store in Chengdu, China, in September, plans about
350 openings in 2013.
Shares in Inditex were up 0.0 percent by 1145 GMT. The stock
is one of the lower performers on Spain's blue-chip index Ibex
this year, but has almost doubled since early 2012,
meaning it vies with bank Santander to be the country's
largest traded company.
Inditex shares trade at 25 times forward earnings compared
with 23 times for H&M and almost double that of Gap,
according to Thomson Reuters data, reflecting expectations that
the Spanish company's greater exposure to emerging markets
should help it grow faster.
Some analysts also see the expansion of Inditex's online
offer as boosting sales rather than cannibalising those made in
stores, as the online service helps sell to customers who live
too far from a physical outlet while also helping publicise a
brand which has mostly shunned traditional advertising.
Inditex, which has moved faster to embrace e-commerce than
H&M, has opened online stores in 24 markets compared with nine
for H&M, most recently in Russia. It said it will expand to
South Korea and Mexico in 2014.
"We continue to regard the business model as best in class
at generating high-cash margins and paybacks globally owing
primarily to its flexibility. We think online trading enhances
this," said Nomura analyst Fraser Ramzan in a note to clients.
"With over 30 percent of sales generated from Spain,
Portugal, Italy and Greece, and underlying apparel retail
trends improving in these markets in recent months, we continue
to be constructive on the shares."
However, in the short run, the company has seen sales growth
crimped due to currencies in some of its 86 markets losing value
against a strong euro.
Nine-month net profit to the end of October was 1.67 billion
euros ($2.3 billion), flat from last year and in line with a
forecast for 1.67 billion in a Reuters poll of analysts.
Earnings before taxes, interest, depreciation and
amortisation (EBITDA) reached 2.78 billion euros on sales of
11.93 billion, also in line.
Inditex said its gross margin slipped to 59.9 percent for
the nine months from 60.5 percent for the same period last year,
but was up from 58.6 percent in the first half.
H&M, which makes the bulk of its sales in Europe, in
September posted forecast-beating results for its third quarter,
recording its first quarterly increase in gross profit margin in
more than three years to 58.8 percent.