March 14, 2018 / 6:43 AM / a year ago

Zara owner Inditex full-year profit up 7 pct

LA CORUNA, Spain, March 14 (Reuters) - Inditex, owner of fashion chain Zara, reported a seven percent jump in annual net profit on Wednesday despite negative headwinds from a strong euro and helped by double-digit growth in online sales.

Inditex reported net profit of 3.37 billion euros ($4.2 billion), in line with analyst expectations, on revenue of 25.34 billion euros, also in line with analyst expectations for the financial year which runs from February to January.

The retailer, which owns a stable of brands from upmarket label Massimo Dutti to home wares chain Zara Home, said online sales grew 41 percent over the year to reach 10 percent of net sales across the group in 2017.

It is the first time Inditex has broken out online sales. Unlike many fashion retailers struggling with competition from online vendors like Amazon, Inditex is holding up well as brands like Zara merge their high street presence with a slick online offering.

Large stores in prime shopping areas act as a showcase for clothing which can be bought there and then or ordered later online via the app or website. Online purchases can be picked up or returned in store.

The company said sales at constant exchange rates grew 9 percent in the first five weeks of the new financial year as shoppers snapped up items from the spring/summer collections like printed maxi dresses, linen separates and pastel blazers from Zara.

Inditex is vulnerable to foreign exchange rates as it reports in euros yet makes around half its sales in other currencies.

Shares in the company fell to a three-year low last month after analysts cut their price targets on the stock due to the effects of a strong euro, which has strengthened against most global currencies since the beginning of the year.

Inditex trades at around 22 times estimated 2018 earnings compared to around 15 times earnings for Swedish rival H&M and around 20 times earnings for Associated British Foods, owner of budget fashion brand Primark.

It proposed a dividend of 0.75 euros per share, on Wednesday, an increase of 10.3 percent on the year ago period. ($1 = 0.8066 euros) (Reporting By Sonya Dowsett; Editing by Paul Day)

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