The biggest clothing retailer in Europe – Industria de Diseno Textil SA (Inditex) announced in an official statement today that its first-half profit fell less than analysts expected, while sales rose more than projected.
According to the companys statement, Inditex net income over the first half that ended July declined from €951 million over the same period a year ago to €928 million ($1.2 billion). This result, however, topped analysts initial forecasts of earnings of €909.8 million. The company shared that its revenue over the period jumped by 5.6% to €8.09 billion, and increased by 10% in local currencies between August 1st and September 12th.
The companys profitability has been impaired by weakness of some currencies against the euro, particularly in emerging markets, alwthough the impact was now easing.
Analysts at Citigroup said in a research note, which was cited by the Financial Times: “We expect the fading adverse effects of currency trends and ongoing robust underlying trading to drive a return to double-digit earnings per share growth in the second half.”
Inditex has managed to reduce its reliance on its home market, which is responsible for generating about 22% of the fashion retailers revenue. The company now has more than 6 000 stores in 88 markets around the world with its brands including Bershka and Massimo Dutti.
Russia, which is the third-biggest market of the company, was hit by diplomatic and economic tensions tied to the crisis in Ukraine, while fighting with Islamic State unsettled the Middle East, another significant market.
Still, the company has been recently betting on online expansion, offering Web sales in more than 20 markets. Inditex is also focused on adding more online operations in China, South Korea and Mexico in 2014.
Industria de Diseno Textil SA lost 2.08% to trade at €22.83 per share at 12:05 GMT, marking a one year change of +3.56%. The company is valued at €72.65 billion. According to the Financial Times, the 32 analysts offering 12-month price targets for Industria de Diseno Textil SA have a median target of €24.39, with a high estimate of €31.00 and a low estimate of €17.10. The median estimate represents a 4.61% increase from the previous close of €23.31.
TradingPedia.com is a financial media specialized in providing daily news and education covering Forex, equities and commodities. Our academies for traders cover 
