Inditex Earnings Show Growth as Rivals Such as Gap Falter
Inditex Says Sales on Track as Profitability Improves
(Bloomberg) -- Inditex SA reported higher earnings and sales as the owner of the Zara apparel chain expands e-commerce at a breakneck speed while rivals such as Gap Inc. falter in a weak clothing market.
Though cold and rainy weather weighed on the Spanish company’s first-quarter sales, revenue rose 9.5% in local currencies at the start of the second quarter, showing how Inditex can bounce back from a slowdown thanks to its quick reaction times.
The company is expanding online sales to practically every country around the world this year, leaning on e-commerce as a better way to gain clients in locations where it wouldn’t make sense to open shops. Six of the Spanish retailer’s chains added more than 100 online markets recently, expanding the reach of brands such as Massimo Dutti and Stradivarius.
Sales should rise 4% to 6% on a like-for-like basis this year, Chairman and Chief Executive Officer Pablo Isla said Wednesday, maintaining Inditex’s sales forecast and squelching analyst concern that the goal is too high. The company also reported that profitability continued to improve in the first quarter after widening for the first year in six recently.
Zara plans to add nine online markets in the autumn-winter season after recently adding Brazil. Isla is preparing to hand the CEO role to Chief Operating Officer Carlos Crespo.
Inditex shares were little changed in Madrid, having gained 13% this year. Gap, which recently reported a 10% slump in comparable sales at its namesake chain, has dropped 29% in the same period.
To contact the reporter on this story: Thomas Mulier in Geneva at tmulier@bloomberg.net
To contact the editor responsible for this story: Eric Pfanner at epfanner1@bloomberg.net
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