Zara Owner Inditex Shares Rise on Better-Than-Expected 2Q Figures
By Mauro Orru
Shares in Industria de Diseno Textil SA, the owner of Zara known
as Inditex, rose Wednesday on the back of a better-than-expected
set of numbers for the second quarter as the group retained
profitability at a difficult time for the retail sector.
At 0820 GMT, Inditex shares traded 6.6% higher at EUR25.45.
The Spanish fashion giant, which also owns Oysho, Massimo Dutti
and Pull&Bear, posted net profit of 214 million euros ($253.5
million) for the second quarter, down from EUR816 million for the
second quarter of the previous year.
Net sales for the same period fell to EUR4.7 billion from EUR6.9
billion, but analysts agree that the company fared better than
expected despite contractions in second-quarter figures.
"Current trading was always going to be investors' greater area
of interest, and Inditex has not disappointed here," analysts at
U.S. bank Jefferies said, pointing out that net profit came in well
above their estimates of EUR62 million and consensus at EUR73
million, while sales were broadly in line.
Inditex's net cash grew EUR734 million in the quarter and the
company managed to reduce second-quarter operating expenses by 21%,
which analysts at U.S. bank Citi said was "impressive" compared
with their estimates of a 15% reduction.
However, the company's first-half results suffered from the
impact of temporary store closures due to coronavirus lockdown
measures, particularly in the first quarter.
Inditex reported a net loss of EUR195 million for the six months
compared with a net profit of EUR1.55 billion a year earlier.
The figure includes a EUR308 million provision for its
store-optimization program which Inditex booked in the first
quarter. The company previously said it would close between 13% and
16% of its total store network as part of a 2020-22 strategy.
First-half net sales plunged to EUR8.03 billion from EUR12.82
billion, although online sales grew 74%. However, Inditex said
sales have been progressively recovering as 96% of its stores were
open by the end of July.
Inditex didn't provide specific guidance for the year, but said
it's seeing a rapid recovery in operations heading into the second
Write to Mauro Orru at firstname.lastname@example.org; @MauroOrru94
(END) Dow Jones Newswires
September 16, 2020 04:46 ET (08:46 GMT)
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