Inditex Lifts Profitability Outlook After Strong Earnings Growth — Update

By Andrea Figueras

The owner of Zara clothing stores lifted its outlook for profitability after earnings increased in the first nine months, though sales growth has slowed in the most recent quarter.

Inditex said on Wednesday that net profit in the nine months ended Oct. 31 jumped 32.5% to 4.10 billion euros ($4.43 billion) from EUR3.1 billion in the same period last year.

It now expects its gross margin to rise by 75 basis points from last year, up from a previous forecast of a stable gross margin plus or minus 50 basis points.

Sales rose 11% to EUR25.6 billion for the nine-month period, implying third-quarter sales of around EUR8.76 billion. Analysts had expected quarterly sales of EUR8.88 billion, according to a consensus forecast from FactSet.

At constant currencies, nine-month sales grew 15%, which compares to growth of 20% in the year-earlier period. Analysts have expressed concerns about the effect of damped consumer spending over the past weeks, while Bernstein analysts blamed the slowdown on unfavorable weather in the quarter, which delayed sales of the autumn/winter season.

Third-quarter earnings before interest and taxes were EUR2.03 billion, ahead of analysts' expectations of EUR1.97 billion, the Spanish fashion company said.

At current exchange rates, it estimates a negative 4% currency impact on sales, while it previously anticipated a 3.5% negative impact.

Stockholm-based H&M Hennes & Mauritz, one of the company's main competitors, is set to report fourth-quarter sales on Friday.

Write to Andrea Figueras at andrea.figueras@wsj.com

(END) Dow Jones Newswires

December 13, 2023 04:40 ET (09:40 GMT)

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