Textile giant Inditex posts weak profit growth

Spanish textile giant Inditex, owner of global fashion brand Zara, reported Wednesday a slight rise in profits in the first half of 2013 and a solid start to sales in the second half.

Textile giant Inditex posts weak profit growth
A man walks past a Zara store in northern Spain: Zara is a key piece of the Inditex fashion empire. File photo: Miguel Riopa/AFP

Zara said net profit edged up one percent from the same period a year earlier to €951 million ($1.3 billion) in the six months to July 31st, 2013.

Sales rose six percent over the same period to €7.7 billion, the group said.

But operating expenses also climbed by six percent, reaching €2.9 billion, as Inditex expanded its retail spaces including with new store openings.

Click here to read The Local's profile of Amancio Ortega: the richest man you've never heard of.

Inditex operated a total of 6,104 stores as of July 31st including Zara, Pull & Bear, Massimo Dutti, Bershka, Stradivarius, Oysho and Zara Home. That compared to 5,693 stores a year earlier.

Giving an early insight into the performance for the second half of 2013, the group posted a 10-percent rise in store sales on a local currency basis from August 1 to September 14th, 2013.

Inditex's worldwide performance has helped it perform well despite conditions in its home country Spain, which is struggling to emerge from a two-year recession and an unemployment rate that reached 26.26 percent in the second quarter of 2013.

In the first half of this year, Spain accounted for 19.3 percent of Inditex sales while other European countries contributed 44.6 percent, the Americas 14.4 percent, and Asia and the rest of the world 21.7 percent.

The first Zara shop opened in 1975 in La Coruna in northwestern Spain, a city that is still home to its headquarters.

Inditex's 77-year-old founder Amancio Ortega, listed by Forbes as the world's third-richest man with $57 billion, stepped down as head of the group in 2011, handing over the reins to former managing director Pablo Isla.

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