Profits rise for Zara

Spanish retail group Inditex, who own high street Zara fashion chain, said on Tuesday that net profits in the first nine months of the year had risen 28 per cent compared to last year and that trading in the fourth quarter was in accordance with expectations.

The group, which pioneered the innovative "fast fashion" business model integrating design, manufacturing and distribution in a single company and enabling stores to react to customer demand within weeks rather than months, said that net profits reached €520.5m or 83.8 cents per share, on sales that rose 20 per cent to €4.65bn. Gross margins also rose slightly to 57 per cent on sales.

By the end of November, Inditex said it had a total of 2,643 stores in 60 countries and that it intends to have opened between 400 and 450 new stores by the end of the fiscal year. By the end of October, the group had already opened 323 new outlets.

While other fashion groups rely on factories in China, Inditex manufactures its clothes in Spain or countries nearby. As a result, its designers are able to copy ideas from high fashion and change stock quickly to react to popular trends or the weather. However, as other groups imitate Inditex's business model and shorten supply chains, analysts have suggested that the group may be losing some of its competitive advantage.