Zara owner Inditex reports record profit on Christmas sales

Operating profit rose 29% to €5.5bn, the company said Wednesday. That was just short of the average analyst estimate. Pic: Collins Photo Agency

Inditex reported record earnings as the Zara clothing chain operator benefited from strong demand over the Christmas holiday sales period. The company is raising its dividend by 29%.

Operating profit rose 29% to €5.5bn, the company said Wednesday. That was just short of the average analyst estimate.

Low-price clothing retailers are benefiting from the cost-of-living crisis. Penneys owner Primark said last month its outlook is improving as cash-strapped shoppers seek inexpensive fashion at the UK budget clothing chain.

The gross margin, a closely watched metric that measures profits as a percentage of sales, stood at 57%, just ahead of analyst estimates.

The company is boosting its annual dividend payment to €1.20 a share.

Meanwhile, H&M, the world's second-biggest fashion retailer, reported on Wednesday a 12% increase in December-February net sales while, measured in local currencies, sales were up 3%.

The Swedish group said net sales for the period, its fiscal first quarter, were up 12% from a year earlier to 54.9bn crowns (€4.9bn). Analysts polled by Refinitiv had on average forecast an 11% rise in net sales to 54.4 billion crowns.

It said in a statement that excluding Russia, Belarus and Ukraine the rise in net sales was 16%, and in local currencies, 7%. it did not comment further on the quarterly sales.

Budget player H&M last year saw profits tumble as it, seeking to retain its price-sensitive customers, did not fully pass on soaring raw material, freight and energy costs to its price tags.

The group, which is now in the midst of a programme to reduce staff and cut other costs, will publish its full quarterly report on March 31.

- Bloomberg, Reuters