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Inditex stitches together soaring profits

Wednesday, September 19, 2012 - 02:12

Sept. 19 - First half results for Spanish retailer Inditex see profits jump by a third, thanks to growth in emerging markets, online and in fast fashion, say analysts. Joel Flynn reports.

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It's the world's biggest retailer but the owner of Zara still managed to catch investors off guard. And much like its clothes, Inditex's stock is now flying off the shelves. The Spanish retailer was up almost three percent in early morning trade on Wednesday. That's after profits soared by a third. Mintel's Richard Perks says it's easy to see why the company has done so well. SOUNDBITE: Mintel Retail Director, Richard Perks, saying (English): "Grupo Inditex as a whole, and not just Zara, has got its finger on the pulse of current fashions, and it's delivering what consumers really want at the moment. Even in tough times, they want fashionable merchandise, they want to look fashionable. They may not be buying so much, but they are prepared to buy when they see what they want is in store." The Spanish retailer runs eight brands, including Zara, Massimo Dutti and Bershka. Many analysts say the company's success is down to its operations in the Far East. Retailers across Europe have largely struggled because consumers at home have been hit by recession and austerity. But Inditex's strategy of tapping into growth areas like online, emerging markets and fast fashion has helped it thrive. Zara's Spanish website features 92 new products this week. And it's reduced its reliance on its home market to 22 percent of sales from 26 percent a year ago. Lloyds' Tim Harris says the company has laid a strong base for future growth. SOUNDBITE: UK High Net Worth Business Lloyds Private Bank Chief Investment Officer, Tim Harris, saying (English): "Fashion is famously fickle. This year's hero is next year's struggler, and it's an interesting way of contrasting that with H&M results, but from the Inditex point of view, the market's expecting that the number's are coming through strong, they've got their ranges right this year, their geographic expansion is going at pace, and that is going to have a real impact on the bottom line, and their online investment, as they open up online outlets globally, that's going to yield fruit for them for years to come." Inditex stock has risen 45 percent so far this year. After such a strong performance, many say the company will be in vogue for some time yet. Joel Flynn, Reuters

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Inditex stitches together soaring profits

Wednesday, September 19, 2012 - 02:12