Madrid—Inditex, the world’s largest fashion retailer, reported today that its early 2014 sales were up 12% so far, an improvement over its flat 2013 growth stymied by currency translations and store expansions.
For the year ended Jan. 31, Inditex, which also owns Massimo Dutti and Bershka, earnings before interest, taxes, depreciation and amortization (EBITDA) was flat compared with the previous year—3.9 billion euros (about $5.4 billion), the first time growth has stalled since it went public in 2001. Nonetheless, profit was still in line with analysts’ estimate.
Store Expansions Continue
Annual sales rose 4.9% (8% in local currencies) to 16.7 billion euros on target with analysts’ estimates.
Gross margin contracted to 59.3% last year compared with 59.8% a year earlier, but Inditex forecast a “stable margin” for this fiscal year.
From Feb. 1 to March 15, Inditex said sales rose 12% compared with an 8% gain in fourth quarter.
Anne Critchlow, retail analyst with Societe Generale, said the figure implied 6% sales growth on a comparable basis, compared with a 3% rise in like-for-like sales in 2013.
“That is reassuring. We are seeing recovery in southern Europe and Inditex is quite highly exposed to southern Europe. Spain, Portugal, Greece and Italy—all those countries are bouncing back,” Critchlow said.
Inditex indicated that its plans to spend 1.35 billion euros to open as many as 450 to 500 new stores this year compared to 1.24 billion it spend in 2013 to add 331 new stores.
The emphasis will be on new flagship locations which will have a new look like those it launched in locations such as Fifth Avenue in New York and Paris’ Champs Elysee.
The company said it had started online sales in Greece in March and would launch in Romania in April, followed by South Korea and Mexico later in the year, taking the total number of e-commerce markets to 27.