Inditex disappoints despite jump in sales, profits

(Sharecast News) - Shares in Zara owner Inditex came under pressure on Wednesday, despite a solid start to the festive shopping season, after earnings narrowly missed expectations. The fashion giant said sales grew 7.1% in the nine months to 31 October to €27.4bn, while net income increased 8.5% to €4.4bn.

However, that was marginally below expectations, with analysts expecting net income closer to €4.5bn.

In the third quarter, sales rose 6.8% to €9.4bn, while net profits increased 5.8% to €1.7bn. That was a slowdown on the previous quarter's growth, when sales improved 7% and net profits 10%.

As at 0900 GMT, shares in the Spanish retailer - which also owns Bershka, Pull&Bear and Massimo Dutti, among others - had lost 5%.

Inditex insisted that the first nine months of the year had been "very robust", however, and struck an upbeat tone looking forward.

Total sales, including both in-store and online, rose 9% year-on-year in the five weeks to 9 December, marking a positive start to the key festive shopping season.

"The autumn/winter collections have been very well received by our customers," Inditex said. "[We] continue to see strong growth opportunities."

Jefferies said: "Current trading is fractionally light, but not inconsistent with a likely double-digit fourth-quarter top line delivery.

"Net/net the group's impressive growth credentials look confirmed, but the shares likely needed a better print to prevent some profit-taking today."

Consensus is currently for fourth-quarter sales growth of 11.5%.

Inditex, the world's largest fashion retailer, is in 214 markets with nearly 6,000 stores.