Inditex to invest more in 2014 as sales bounce back
By Sarah Morris
MADRID (Reuters) - Inditex, the world's biggest fashion retailer, will accelerate investment in 2014 to open more new stores after results last year were hit by falling currencies outside the euro zone and the cost of revamping flagship stores.
The owner of the Zara brand reported on Wednesday that core annual profit in the 12 months ending January 31 was flat at 3.9 billion euros ($5.4 billion), the first time growth has stalled since it went public in 2001, but meeting analyst expectations.
Inditex, owned by the world's third wealthiest man, Amancio Ortega, made sales of 16.7 billion euros in 2013, a rise of 5 percent, or 8 percent in local currencies, exactly in line with the forecast in a Reuters poll.
The Spanish retailer, which runs brands such as mid-market Massimo Dutti and teen labels Bershka and Stradivarius in 6,340 stores in 87 markets, said sales rose 12 percent in local currencies in the period from February 1 to March 15.
"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," said Anne Critchlow, retail analyst with Societe Generale.
Retail sales are expected to accelerate in the spring as warmer temperatures and improving household finances in the United States unleash pent-up demand after an unusually cold and snowy winter there weighed on sales. Inditex made 14 percent of sales in the Americas in 2013.
Sweden's Hennes & Mauritz, the world's second largest fashion retailer behind Inditex, said on Monday its sales rose 11 percent in February, albeit below a median forecast of 14 percent in a Reuters poll.
Inditex shares, which trade at 24.6 times expected 2014 earnings compared with 22.8 times for H&M and 13 times for Gap, have slipped 12 percent since late October on concern about the company's exposure to tumbling emerging market currencies. Continued...