Inditex Profit Boosted by Weak Euro

Revenue rose 16 percent in the start of this quarter through September 10, excluding currency shifts, Arteixo, Spain-based Inditex said Wednesday in a regulatory filing.

Like-for-like sales rose 7% in the six months to the end of July, as cheap oil and credit in Europe and Spanish jobs growth translated into more money in the pockets of Inditex shoppers during a scorching European summer.

Inditex shares, up nearly a quarter this year, were up 3 percent at 0830 GMT, outpacing a 1.9 percent firmer European retail sector and a 1.2 percent increase for H&M.

Net profits at the Spanish group, the world’s largest clothes retailer, were €1.16bn (£853m) between February and July, up 26% from a year earlier. The stock has gained 25 percent this year, giving the retailer a market value of 92 billion euros.

“Inditex have delivered exceptional sales momentum, which alongside a rebounding gross margin has maintained the return to very healthy double-digit earnings growth”, Exane BNP Paribas analysts Simon Bowler and Graham Renwick were quoted as saying in a note by Bloomberg.

The company said it would pay 0.26 euro per share on November 3 as full year 2014 final ordinary and bonus dividend. Unlike rival Hennes & Mauritz AB, which has a bigger reliance on dollar-denominated garments sewn in Asia, Inditex benefits from a stronger dollar as the weaker euro boosts the value of its sales from overseas.

Zara is now pushing into Asia, opening online stores serving Hong Kong, Macau, and Taiwan in the period.