Zara owner’s storming start to new season

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A recovery in Spanish high street spending and warm weather across Europe helped boost sales at fashion giant Inditex in the first half, with a healthy start to the new season auguring well for the owner of Zara.

Inditex, the world’s biggest clothing retailer based in the northwestern Spanish city of Coruna, said sales in local currencies in the six weeks to September 10 jumped 16 per cent, a harbinger for a healthy third quarter.

Like-for-like sales rose 7 per cent in the six months to 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 results come on the heels of rival Hennes & Mauritz, who on Tuesday reported its weakest monthly sales growth in August in more than two years citing exceptionally warm weather in many of its large European markets.

As the Spanish fashion chain sources close to where it sells, it is able to keep up with changing demands, or even changing weather, more quickly than rivals.

European sales make up two thirds of the group’s total and Spain alone, where the economy is recovering after a long crisis, accounts for almost one fifth.

SocGen’s Anne Critchlow described current trading as “very strong indeed” in a note to clients, predicting a slight out-performance in the shares, but noting that performance is likely to slow slightly in the second half.

Net profit rose 26 per cent to £860m, in line with expectations.

In the February to July period sales climbed 17 per cent to 9.42 billion euros, also meeting expectations and underpinned by a weak euro versus the dollar. Core earnings (EBITDA) rose 22 per cent to 1.97 billion euros.