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 ($14.04 billion).

Inditex, based in Arteixo, North-western Spain in 2008 came close to overtaking U.S. fashion house Gap Inc. (GPS) as the biggest clothing retailer in the world by sales.

The San Francisco 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.

Inditex, which sells its garments in more than 4,000 stores at an average price between EUR15 and EUR20, said sales in February, measured in constant currency and adjusted for seasonal effects, rose 9% on the year.

"We think this is a solid performance as February has been a difficult month this year across Europe," said Richard B. Chamberlain of JP Morgan.

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.

The brands most affected by the revision are Zara Home, Inditex's interior furnishing stores, and Oysho, its lingerie stores, which both had performed below average in 2008.

While Inditex's home market performed below group average in 2008, Isla said sales growth in the country remains positive, growing at 1%.

The apparel maker said it expected to continue to outperform the rest of the sector this year.

The company's update sent its share price sharply higher as analysts applauded its plans to trim expansion and cut costs further. At 1324 GMT, the stock was up 4.3% to EUR27.9. The stock is down 21% from year-ago levels, however.

Inditex's business model is more costly to maintain than rival retailers, since it makes most of what it sells close to Spain. It also spends more on logistics, because it sends garment to all its stores twice a week.

The advantage: it can react faster to fashion fads and gets products out to stores before rivals, allowing it to sell at a premium.

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