Inditex SA’s share price up, posts first-quarter profit that beats analysts’ estimates

The worlds biggest clothing retailer by sales – Industria de Diseno Textil SA (Inditex SA) posted a first quarter profit that surpassed the analysts estimates. The satisfactory performance was manly due to the fact the company imposed control on its expansion costs by betting on e-commerce when it comes to increasing its growth.

According to the companys official statement, its net income declined by 7.3% from 438 million euros and reached 406 million euros (550 million dollars) over the first financial quarter that ended April. The result is better than the 391.2-million-euro net income projected by analysts. The companys revenue increased by 4.3% from 3.59 billion euros posted for the same period a year earlier to 3.75 billion euros. Inditex gross margin declined to 58.9%.

Inditex SA also explained that its financial results benefited from the strong underlying growth at its Zara brand. The company also revealed its plans for two new initiatives, which it bets on in order to back its increasing online presence in both the U.S. and China.

After decades of fast growth, the company has faced deceleration in both earnings and revenue growth over the past year. Part of these results are due to the currencies decline against the relatively strong euro in emerging markets, especially as Russia, Turkey, Mexico and China have become the main expansion goal for Inditex SAs Zara brand.

One of the analysts, who work at Bernstein Research – Jamie Merriman commented on the companys performance for the Wall Street Journal: “We expect the market to react positively to todays earnings announcement as Inditex continues to deliver strong operational performance and as investors look ahead to a lower impact from currencies in the quarters to come.”

Industria de Diseno Textil SA (Inditex SA) was adding 1.5% to trade at 111.90 euros per share by 12:44 GMT, marking a one year change of +14.37%. According to the information published on the Financial Times, the 31 analysts offering 12-month price targets for Industria de Diseno Textil SA (Inditex SA) have a median target of 115.60, with a high estimate of 145.00 and a low estimate of 85.50. The median estimate represents a 4.85% increase from the last price of 110.25.