Zara owner Inditex posts sharpest Q1 profit fall since 2009

Wednesday 11 June 2014 08.45
Strong euro has hit Inditex's first quarter profits
Strong euro has hit Inditex's first quarter profits

Net profit at the world's largest clothing retailer Inditex dropped 7.3% in the first quarter, its sharpest drop in five years, after a strong euro hit the Zara owner in some of its most lucrative markets.

Net profit for the three months from February to April was €406m, while earnings before interest, tax and depreciation (EBITDA) slipped 2.3%.

Sales for the three month period rose 4.3% to €3.75 billion.

A Reuters poll had forecast net profit of €383m, EBITDA of €721m and sales of €3.79 billion. 

Inditex, which owns brands like the upmarket Massimo Dutti and teen label Stradivarius, said sales from February to June 8 were up 11%. 

Currencies like the Japanese yen, Turkish lira and Russian rouble have lost between 14 and 21% against the euro in the last year, sapping profit for the Spanish retailer in markets where it charges a premium. 

The retailer said it would propose a 5-for-1 share split at its annual meeting, a move often taken by companies when their share price is very high.

Shareholders will receive five shares for every share they own at the close of business on 25 July. The new shares will begin trading on 28 July.

Inditex shares first hit the €100 mark around 18 months ago and have been at or around this level since then, reaching a record high of €121.8 at the end of October.