Inditex Shares Close Higher After 3Q Shows Improved Profitability
11 December 2019 - 5:23PM
Dow Jones News
By Cristina Roca
Shares in Inditex (ITX.MC) closed higher Wednesday after the
Spanish fashion giant surprised the market positively with its
earnings and profitability during nine-month reporting.
The owner of Zara said net profit for the first nine months of
its year ending Jan. 31 was 2.72 billion euros ($3.01 billion), up
from EUR2.44 billion a year earlier, and backed its full-year
view.
Earnings per share for the third fiscal quarter posted a 14%
increase, beating Citi's expectations, the bank's analysts said.
This, along with a stronger-than-expected gross margin for the
quarter, was "a return to form" for the company, Citi said.
Given that the market had been sceptical about Inditex's lack of
operating leverage during the past few quarters, the company's
better-than-expected profitability was likely well received, UBS
analysts said.
Shares in Inditex ended the day 5.2% higher at EUR30.21 on
Wednesday.
The Spanish fashion giant's improved gross margin possibly
reflected less discounting, while third-quarter earnings before
interest and tax also beat forecasts, reflecting tight cost control
and operating leverage, UBS analysts said.
For the first nine months of its fiscal year, Inditex reported
sales of EUR19.82 billion, up from EUR18.44 billion. In local
currencies, sales grew 7%, the Spanish fashion retailer said.
The result was broadly in line with analysts' expectations,
confirming healthy top-line momentum, Bryan Garnier analysts
said.
Gross margin for the first nine months expanded to 58.2% from
58% the previous year, said Inditex, which also owns the Pull &
Bear, Massimo Dutti and Bershka labels.
The company didn't comment on trading during the start of its
fourth fiscal quarter, but backed its guidance for like-for-like
sales growth of 4%-6% for the fiscal year.
Write to Cristina Roca at cristina.roca@dowjones.com;
@_cristinaroca
(END) Dow Jones Newswires
December 11, 2019 12:08 ET (17:08 GMT)
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