By Cristina Roca 
 

Shares in Inditex (ITX.MC) closed higher Wednesday after the Spanish fashion giant surprised the market positively with its earnings and profitability during nine-month reporting.

The owner of Zara said net profit for the first nine months of its year ending Jan. 31 was 2.72 billion euros ($3.01 billion), up from EUR2.44 billion a year earlier, and backed its full-year view.

Earnings per share for the third fiscal quarter posted a 14% increase, beating Citi's expectations, the bank's analysts said. This, along with a stronger-than-expected gross margin for the quarter, was "a return to form" for the company, Citi said.

Given that the market had been sceptical about Inditex's lack of operating leverage during the past few quarters, the company's better-than-expected profitability was likely well received, UBS analysts said.

Shares in Inditex ended the day 5.2% higher at EUR30.21 on Wednesday.

The Spanish fashion giant's improved gross margin possibly reflected less discounting, while third-quarter earnings before interest and tax also beat forecasts, reflecting tight cost control and operating leverage, UBS analysts said.

For the first nine months of its fiscal year, Inditex reported sales of EUR19.82 billion, up from EUR18.44 billion. In local currencies, sales grew 7%, the Spanish fashion retailer said.

The result was broadly in line with analysts' expectations, confirming healthy top-line momentum, Bryan Garnier analysts said.

Gross margin for the first nine months expanded to 58.2% from 58% the previous year, said Inditex, which also owns the Pull & Bear, Massimo Dutti and Bershka labels.

The company didn't comment on trading during the start of its fourth fiscal quarter, but backed its guidance for like-for-like sales growth of 4%-6% for the fiscal year.

Write to Cristina Roca at cristina.roca@dowjones.com; @_cristinaroca

(END) Dow Jones Newswires

December 11, 2019 12:08 ET (17:08 GMT)

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