* 2011 net profit up 12.5 percent at 1.9 bln euros
* Announces dividend hike of 12.5 pct to 1.80 euros
* Healthy sales growth despite snowy February
By Sonya Dowsett
MADRID, March 21 The world's leading clothes
retailer, Inditex, announced upbeat early spring sales
on Wednesday while reporting a 12 percent rise in annual profit
driven by aggressive expansion into fast-growing Asia.
The owner of fast fashion chain Zara has outpaced rivals
during the downturn in austerity-wracked Europe and has more
than 5,500 stores across about 80 countries including new
markets Azerbaijan, Australia and South Africa.
Asia is a focus of growth for the cash-rich retailer --
especially China which will account for a third of new store
openings in 2012 and where Zara will launch an online store this
Shares, which had risen to a record high on Tuesday in
anticipation of a dividend pay-out, traded steady on Wednesday
up 0.3 percent at 72 euros. Inditex said it would raise its
dividend 12.5 percent to 1.80 euros.
"The level of organic growth is exemplary, it is driving
into Asia, but the risk is always whether it can maintain this
level of growth," said Alejandro Varela, fund manager at Renta
4, with 400 million euros ($529 million)under management.
The retailer, whose other labels include upmarket Massimo
Dutti and accessories brand Uterque, met expectations with a 12
percent rise in full-year net profit to 1.9 billion euros.
Inditex reported store sales in local currencies up 11
percent from Feb. 1 to March 14 when Zara was selling its spring
range including floral print shirts, lemon tailored coats and
studded ankle boots.
This meant like-for-like sales were up around 3 percent in
February and early March during a difficult period when there
was snow through much of Western Europe, said Societe Generale
analyst Anne Critchlow.
WORTH THE PREMIUM?
Sales were up 10 percent during the year, 4 percent on a
same-store basis, and rose across geographic zones, the company
said, without breaking down sales by region.
The gross margin was 59.3 percent of sales during the year,
similar to the previous year, the company said. Chairman and
Chief Executive Officer Pablo Isla said he expected stable gross
margins in 2012.
Just under three quarters of sales are from Europe. Asia and
the rest of the world excluding Americas accounted for 18
percent of sales, up from 15 percent the previous year.
Home country Spain, suffering the highest unemployment in
the European Union and probably already in recession, accounted
for 25 percent of sales, down from 28 percent last year as more
of the retailer's business came from other parts of the world.
Spain sales grew in 2011 and should remain stable in 2012,
Isla told analysts on a conference call.
Inditex, founded by Spain's richest man Amancio Ortega, is
trading at 23.3 times expected 2012 earnings, according to
Reuters data, more expensive than rival H&M at 22.7
times and Gap of the United States at 14.5 times.
Investment bank Nomura said Inditex warranted its premium,
given its consistently strong results, as it raised its target
price on the stock to 72 euros per share from 66 euros.
Inditex's production model is seen as having shielded it
from some of the worst effects of the crisis by allowing it to
adapt quickly to shifting consumer behaviour and changes in
labour and material costs.
As well as making clothes in Asia, where labour costs are
rising from previously low levels, Inditex retains manufacturing
operations in Spain -- in its home region Galicia -- as well as
in neighbouring Portugal and Morocco.