Inditex Records Strong Early 4Q Sales -- Earnings Review

By FeaturesDow Jones Newswires

Spain's Inditex SA (ITX.MC), the owner of Zara stores, on Wednesday reported results for February through October, the first nine months of its financial year. Here is how they came in:

SALES: The company had nine-month sales of 17.96 billion euros ($21.21 billion), nearly meeting a forecast of EUR18.0 billion, and up from EUR16.4 billion in the year-earlier period.

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NET PROFIT: Net profit for the period was EUR2.34 billion compared with a forecast of EUR2.35 billion, and up from EUR2.21 billion a year earlier.

Nine-month estimates were based on first-half results and third-quarter forecasts provided by FactSet.

WHAT WE WATCHED

SALES PERFORMANCE: As analysts had expected, sales slowed in the second part of the third quarter before accelerating again in the fourth quarter. Inditex reported constant-currency sales growth of 13% for the first six weeks of the fourth quarter, in line with estimates from Deutsche Bank. Ahead of the release, analysts had expected the late third-quarter slowdown to be offset by a strong start to the fourth, supported by the return of cold weather after a warm October.

STORE OPENINGS: Inditex opened 212 net stores in the nine-month period, slightly under last year's figure of 227. Breaking it down by quarter, there were 99 openings in the third quarter, falling short of Deutsche Bank's expectation of 131. Among the third-quarter openings, Inditex highlighted its launch in Belarus, which brings the retailer's presence to 94 markets.

CURRENCY EFFECTS: The company's gross margin fell to 57.4% in the nine-month period, down from 57.9% a year earlier. The decline was expected by analysts, since currency headwinds tend to hinder performance. In an earnings call, management said that developments would have been more positive barring currency effects, noting that these had a negative impact on nine-month sales of around 1%.

Write to Alberto Delclaux at alberto.delclaux@dowjones.com

(END) Dow Jones Newswires

December 13, 2017 05:39 ET (10:39 GMT)