The world's biggest clothing retailer, Zara-owner Inditex, reported a 10% jump in annual net profit as strong growth in emerging markets and increased online presence outweighed negative currency effects.
Sales in the first six weeks of the new financial year tapered off slightly after a period of exceptional growth during which the Spanish-based company moved brands to bigger stores in prime retail locations.
The Spanish-based company moved brands to bigger stores in prime retail locations
They beat expectations, however.
Sales at constant exchange rates rose 13% in the first six weeks of the new financial year as customers snapped up items from its new spring collections.
By contrast, rival fashion retailer H&M today reported a 1% drop in local-currency February sales, substantially lagging analysts' expectations for a 6% increase.
Inditex, known for speeding the latest trends from runway to stores in a matter of days, reported net profit of €3.16 billion for the year to the end of January, in line with analysts' expectations.
Negative currency effects stripped 3 percentage points from annual sales growth, the company said.
Inditex reports in euros but makes more than half of its sales in other currencies, meaning falls in value of currencies like the Mexican peso and the Russian rouble against the euro affect earnings and profit margin.
Concerns on lagging profit growth relative to aggressive sales growth at the retail behemoth whose stable of brands includes homewares chain Zara Home and teen label Pull and Bear have weighed on Inditex shares.
They have underperformed European stocks by around 3% over the past year.
However, analysts expect currency effects to swing in Inditex's favour over the next 12 months with a consequent boost to profit margins.
The company opened stores in 56 countries during the year, including first openings in New Zealand, Vietnam and Paraguay, bringing its total store count to over 7,200.
It launched online sales across its stable of brands in Turkey and said today it would start online sales in India in 2017.
Cash-rich Inditex also today proposed a 13% increase in dividend to 0.68 euros per share.
