Zara owner Inditex has seen strong holiday season trading with sales up 14% in the six weeks to December 11, it said on Wednesday, as it reported earnings in line with analyst forecasts and raised its margin outlook for the year.
The world's biggest fashion retailer reported a net profit of 4.1 billion euros ($4.42 billion) for the nine-month period to end-October, while sales in stores and online gained 11%, slower than 19% growth a year earlier.
The company behind Zara and other brands is cutting store numbers and investing in larger, more attractive stores, as well as improving its logistics to deliver online orders faster than its rivals.
Thanks to these changes, Inditex now sees its 2023 profit margin gaining 75 basis points. It had previously guided to a stable gross margin.
"The company is enhancing its ability to deliver online orders very quickly and its capacity to put in stores what consumers want most," said José Ramon Iturriaga, fund manager at Abante Advisors, which holds Inditex shares.
Third-quarter sales between August and October grew by 7%, down from 16% growth in the second quarter.
Unseasonably warm weather may have affected sales in several markets, said Patricia Cifuentes, a senior analyst in the securities division of Spanish fund managers Bestinver.
"The weather throughout Europe has been extremely adverse, it has been a particularly warm October and Inditex makes 60% of its sales in Europe," Cifuentes told Reuters.
The fast-fashion retailer's results came one day after it was forced to pull a campaign by Zara which triggered calls for a boycott after some saw the imagery of statues wrapped in white as evoking corpses in shrouds in Gaza.
As it seeks to boost sales in China, Inditex said it recently launched a weekly five-hour "livestream experience" on Chinese social media platform Douyin showing customers footage of catwalks. The livestream will soon be available in other markets, Inditex said.
($1 = 0.9276 euros)
(Reporting by Corina Pons in Madrid and Helen Reid in London; editing by Inti Landauro and Jason Neely)
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