Fashion retailer Inditex SA (ITX.MC) Wednesday posted resilient full year profits and sales as it continued to attract bargain hunters to its Zara clothing chain, but it scaled down its expansion plans for this year amid a deepening global economic downturn.

Net profit in the 12 months to Jan. 31 stood at EUR1.25 billion, unchanged from a year earlier.

Europe's largest fashion retailer by revenue, ahead of Sweden's Hennes & Mauritz AB (HM-B.SK), said sales rose 10% to EUR10.41 billion.

Inditex is about to overtake U.S. fashion house Gap Inc. (GPS) to become the biggest clothing retailer in the world by sales. The San Francisco-based retailer recently posted full-year sales of $14.5 billion but, while Inditex continues to press on in its global expansion, Gap is closing more stores than it opens.

Both sales and profits were in line with analyst estimates. Like-for-like sales - or sales from stores open more than two years - shrank an annual 0.7% in the second half, after growth of 1% in the first half.

Retailers around the globe are increasing markdowns to lure customers and keep inventories tight, although Chief Executive Pablo Isla said Inditex hadn't made dramatic price cuts.

Still, weaker sales in recent months have prompted Inditex to rein in its expansion plans for 2009. It will open between 370 and 450 new stores this year, mostly in the second half and mostly outside of Spain, down from 573 in fiscal 2008.

It will also cut capital expenditure to EUR600 million, from EUR937 million in 2008, although CEO Isla indicated that this scale-down was likely to be temporary.

"Our long-term vision remains exactly the same," he said. "We are present in more than 70 countries. In 70 of them, our market share is below 1%, and we are gaining market share in all these markets," he said.

Inditex said sales in February, measured in constant currency and adjusted for seasonal effects, rose 9%.

The apparel maker said it expected to continue to outperform the rest of the sector this year, and the news sent its shares sharply higher as analysts applauded its plans to trim expansion, and cut costs further.

Inditex expects EUR75 million in further cost savings this year, partly due to lower rental expenses for its stores.

At 0951 GMT, the stock was up 5% to EUR28.08, outperforming the Spanish market, which was up 1%. The stock had been volatile in the run-up to results, on speculation that store sales were suffering from the sharp consumer downturn in Spain.

CEO Isla said that, while Inditex's home market had performed below group average in 2008, sales growth in the country remains positive. The Spanish weakness was partly offset by its Asian stores selling above average. he added.

Inditex last year opened store number 4,000 in Tokyo's fashionable Ginza district. More recently, it unveiled plans to enter the Indian market in 2010 in a joint venture with Tata Group.

The company kept its 2008 dividend flat at EUR1.05 a share.

Company Web site: www.inditex.com

-By Christopher Bjork, Dow Jones Newswires, +34 91 395 81 23, christopher.bjork@dowjones.com