Strong euro hits Inditex’s first-half results

MADRID: Spain’s fashion retail giant Inditex SA, owner of popular brand Zara, said its first-half net profit rose 9% but the results were eroded by the strong euro.

The company posted a net profit of €1.36 billion ($1.63 billion) during the first half of its fiscal year, which runs from February 1 to July 31, up from €1.26 billion during the same year ago period.

Revenues during the period were up 11.5% to €11.67 billion, with all of its store brands registering growth during the first half, Inditex said in a statement.

“The performance in the first half was mainly due to the mixed effect caused by the strong appreciation of the euro versus most major currencies since June.”

Inditex makes most of its clothes in Europe in order to be able to respond quickly to trends but this makes its profits sensitive to fluctuations in the value of the euro since over half of its sales are in markets outside the currency area.

The company does not report results for the second quarter alone, but a comparison with the first quarter result of €654 million indicates it was around €712 million.

Analysts polled by data provider FactSet Research Systems Inc had been looking for a net profit of €733 million in the second quarter.

Inditex said it opened new stores in 35 markets during the first half, bringing the total number of shops worldwide to 7,405 in 94 countries.

Based in Arteixo, a small town in northwest of Spain, Inditex operates eight brands including Massimo Dutti, Bershka and Pull & Bear. It makes about 60% of its clothes relatively near its base — in Spain, Portugal, North Africa, Turkey and Eastern Europe.