Zara’s charm in Asia boosts Inditex sales by 12%

Zara’s owner Inditex SA benefited from its flagship brand’s charm in Asian markets and saw a 12% increase for its full year sales. Net income rose to 1.93 billion euros ($2.56 billion) in the 12 months ended Jan. 31, the Spanish retail giant said Wednesday.

Largest apparel retailer beat all estimates, as per instance, the average of 15 estimates compiled by Bloomberg was 1.92 billion euros, as opposed to the actual 1.93 billion euros Inditex reported.

Zara plans to start online sales in China in the fall, according to Inditex, which gets about two-thirds of revenue from Europe. As of September, all of the retailer’s brands had online stores, and it offered e-commerce in 18 European markets, as well as the U.S. and Japan. The retailer said it plans to open 480 to 520 stores in 2012, including its first Massimo Dutti stores in the U.S. The expansion will lead to an increase in capital spending to about 950 million euros from 864 million euros a year earlier.

Net sales last year rose to 13.79 billion euros, representing growth of 10 percent, or 11 percent at local currency rates, Inditex said. Store revenue at constant exchange rates climbed 11 percent from Feb. 1 to March 14, it said.

Earnings before interest, tax, depreciation and amortization climbed 9.8 percent to 3.26 billion euros as the company’s gross margin remained at 59.3 percent of sales.

"Like-for-like sales and gross margin seem healthier than expected in the final quarter. On every level of the high-quality indicators, it is a beat," Société Générale analyst Anne Critchlow said for The Guardian.

Inditex rose 0.3 percent to 71.94 euros right after publishing its full year figures, extending a seven-day winning streak. “Inditex 2011 earnings were really strong and sales performance at the beginning of this year is pretty good too,” said Jose Rito, an analyst at Banco BPI in Porto, Portugal, published Bloomberg.

However, Business Week reported how some analysts were disappointed by a year-end net cash total of 3.47 billion euros, which Rito said was lower than he had expected. A dividend of 1.8 euros a share compared with the 1.81-euro average estimate of 25 analysts compiled by Bloomberg. Shares in Inditex, reached a record high of €72.15 on Monday as investors speculated on the cash-rich Spanish group's dividend.

Image: Zara