Zara owner Inditex's first-half profit slips but beats forecasts

MADRID, Spain - Zara owner Inditex on Wednesday posted a smaller-than-expected 2.4 percent drop in first-half net profit as strong cost controls helped compensate for negative currency effects.

The world's largest clothing retailer posted net profit for the period from February 1 to July 31 of 928 million euros (737.03 million pounds)


"A strong euro is hurtful to Inditex sales and especially to profits, but this impact is annualising," said Anne Critchlow, analyst at Societe Generale.

Earnings before interest, taxes, depreciation and amortisation slipped 0.4 percent to 1.6 billion euros while sales at Inditex's more than 6,400 stores rose 5.6 percent to 8.1 billion euros.

Sales for the period Aug. 1 to Sept. 12 in local currencies rose 10 percent after increasing 11 percent in the first half to 8.1 billion euros.

Inditex said negative currencies had hit sales by 4 percentage points.

A Reuters poll had forecast net profit of 908 million euros, EBITDA of 1.6 billion euros and sales of 8.1 billion euros.

Like-for-like sales, which strip out the increase to sales from new stores, grew 4.5 percent in the first half, which runs from Feb 1 to July 31.

Inditex has outperformed many rival retailers in the global crisis through its aggressive expansion to some 87 markets including fast-growing cities in China.

But the fall of currencies against the euro in lucrative markets such as Russia, where some analysts estimate it makes almost 6 percent of its sales and Japan, where it makes about 4 percent of its sales, have hit results this year.