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  HOME | Business & Economy (Click here for more)

Inditex Shares Slip after Nine-Month Results Disappoint

BARCELONA – Inditex shares traded significantly lower Wednesday after the Spanish fashion retailer announced a rise in nine-month earnings that came short of analysts’ expectations.

Inditex’s nine-month sales rose 2.6 percent to 18.43 billion euros ($20.88 billion), while analysts had seen sales for the period at 18.72 billion euros ($21.21 billion), according to a FactSet estimate.

At 0825 GMT, Inditex shares traded 6.7 percent lower at 24.56 euros.

“Weaker sales may cause a wobble today,” Jefferies analyst James Grzinic said.

“It has been quite a volatile period because of external factors,” Inditex Chief Executive Pablo Isla said during a conference call.

The company’s third-quarter like-for-like sales growth missed forecasts as a result of unusually hot weather in September and the company’s decision not to intensify promotional activity, Bryan Garnier analyst Cedric Rossi said.

The owner of the Zara chain of stores said net profit from February to October was 2.44 billion euros ($2.77 billion) compared with 2.34 billion euros a year earlier. The result came short of analysts’ expectations of a net profit of 2.46 billion euros, according to a consensus estimate provided by FactSet.

The company said its gross margin for the period was 58 percent, up from 57.4 percent the previous year, thanks to its operational efficiency, citing its decision “not to participate in the promotional activity widely seen in the sector since September.”

Like-for-like sales growth accelerated to 5 percent during the months of October and November, the first month of the next quarter, showing that Inditex’s top line has already rebounded, according to Bryan Garnier.

The Spanish retailer said it was backing its guidance of 4-6 percent like-for-like sales growth as well as its gross margin guidance for the second half of the fiscal year ending January.

 

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