Zara owner Inditex sales bounce back after flat 2013 profit
Global clothing giant Inditex, owner of Zara, said early 2014 sales shot up after unusually low profit growth last year due to depreciating currencies outside the euro zone and the cost of refurbishing flagship stores.
Core annual profit (earnings before interest, taxes, depreciation and amortization) in the 12 months ending January 31 was flat compared with a year earlier for the first time since Inditex went public, company results showed on Wednesday.
Inditex, owned by the world's third wealthiest man, Amancio Ortega, made sales across its 86 markets of €16.7bn in 2013, exactly in line with the forecast in a Reuters poll and up 5pc from a year earlier.
The Spanish retailer, which runs brands such as mid-market Massimo Dutti and teen labels Bershka and Stradivarius, said sales rose 12pc in the period from February 1 to March 15, which an analyst said indicated improvement in key markets.
Anne Critchlow, retail analyst with Societe Generale, said that figure implied 6 percent sales growth on a comparable basis, compared with a 3pc rise in like-for-like sales in 2013.
"That is reassuring. We are seeing recovery in southern Europe and Inditex is quite highly exposed to southern Europe. Spain, Portugal, Greece and Italy - all those countries are bouncing back," Critchlow said.
Inditex has suffered from a double-dip recession in its home market Spain, where domestic spending has plummeted, and has quietly been expanding its budget Lefties brand.
Spain sales have fallen an average 2.7pc on a like-for-like basis for the last five years, compared to a 5.5pc rise in global sales, estimated BernsteinResearch.
The company said it was proposing a €2.42 per share dividend on 2013 earnings, up 10pc.
Net profit for the year ending January 31 was €2.4bn, up 1pc from a year earlier.
Earnings before interest, taxes, depreciation and amortisation (EBITDA) was unchanged at €3.9bn.
A Reuters poll had forecast net profit of €2.4bn, EBITDA of €3.9bn and sales of €16.7bn.