Reuters: Hot Stocks: UPDATE 2-Inditex sees pick-up after tough first half

Reuters: Hot Stocks Reuters.com is your source for breaking news, business, financial and investing news, including personal finance and stocks. Reuters is the leading global provider of news, financial information and technology solutions to the world's media, financial institutions, businesses and individuals. // via fulltextrssfeed.com

Manage your social media Best social media tool for image publishing to Facebook and Twitter. Look amazing and delight your followers. Get 40% off when you sign up today. From our sponsors

UPDATE 2-Inditex sees pick-up after tough first half Sep 18th 2013, 07:39 Wed Sep 18, 2013 3:39am EDT * H1 net 951 mln euros vs f'cast 926 mln * Sales up 6 percent at 7.7 billion euros * Says sales up 10 pct at start of Q3 * Gross margin slips to 58.6 pct of sales vs 59.6 pct * Shares up 0.5 percent, hit record high (Adds store openings and analyst comment) By Sarah Morris and Tracy Rucinski MADRID, Sept 18 (Reuters) - Zara owner Inditex said sales had risen 10 percent at the start of the third quarter, pointing to a recovery after poor weather and weak foreign currencies weighed on profit in the first half. First-half net profit at the world's largest clothes retailer, which owns eight brands including upmarket Massimo Dutti and teen label Bershka, rose 1 percent to 951 million euros ($1.3 billion), beating an average analyst forecast of 926 million on the back of strict cost controls and a lower tax rate. The results from the Spanish company, whose biggest global rival is Sweden's H&M, were among its weakest after years of stellar performance, but showed an improvement from the second quarter onwards. Its shares were up 0.5 percent in early trade, hitting a record 112.6 euros. Unlike rivals, Inditex gives no monthly or quarterly like-for-like sales, which compare sales at stores open more than a year, but analysts said Wednesday's statement showed trading had accelerated. Same-store sales for the first half ended July 31 grew 2 percent, implying a 3.3 percent rise in the second quarter, compared with a 0.5 percent rise in the first quarter, calculated Societe Generale analyst Anne Critchlow. They could have accelerated to 4 percent in the first six weeks of the third quarter, she said. "This is impressive as the prior year comparative for those weeks was a very strong 9 percent," said Critchlow. Inditex has held up better than some other retailers during the global economic crisis, largely thanks to its "fast fashion" model under which it quickly produces many affordable versions of catwalk trends in small quantities, allowing it to respond quickly to consumer demand. But this year the company has struggled to match a particularly good 2012, which was boosted by more expensive fashion trends. The first half was the weakest since net profit declined in 2009. Its gross margin slipped to 58.6 percent of sales versus 59.6 percent a year ago, showing the retailer struggled to increase its profit rate. Highly cash generative and practically debt free, Inditex has expanded aggressively into emerging markets like Russia and China, opening 95 new stores to bring its total to 6,104 across 86 markets. Inditex's shares, which have tripled in value since Spain's economy imploded five years ago to outperform the main blue chip index, have lost some of their lustre this year, up 4.4 percent versus a 10 percent gain on the Ibex. The shares trade at 24.7 times forecast 2013 earnings, above H&M's 23 times multiple and an average 16 times multiple for the sector, according to Thomson Reuters data. H&M on Monday said sales at stores open at least a year rose a slightly more-than-expected 4 percent in August, the biggest rise in 11 months and sending its shares to a record high. ($1 = 0.7491 euros) (Editing by David Cowell and David Holmes) Link this Share this Digg this Email Reprints

You are receiving this email because you subscribed to this feed at blogtrottr.com. If you no longer wish to receive these emails, you can unsubscribe from this feed, or manage all your subscriptions