The world's biggest clothing retail group Inditex, owner of fashion chain Zara, today reported a 3% rise in first-half profit and a rise in gross margin despite a stronger euro.
Inditex's profits are sensitive to fluctuations in the euro.
This is because it makes most of its clothes in the euro zone to respond quickly to fashion trends but generates more than half of its sales in countries outside the currency bloc.
Inditex also owns upmarket label Massimo Dutti and underwear label Oysho.
It said its first-half gross margin had risen 4% on the year and estimated this measure of profitability would expand by around 50 basis points during the second half of the year.
It booked sales for the six months to the end of July of €12 billion, up 3% on year, yielding net profit of €1.41 billion.
Inditex, controlled by Europe's richest man, Amancio Ortega, said that its autumn/winter collections featuring items such as printed dresses with embroidery and corduroy coats at Zara had been well received by customers.
"Management expects a growth in comparable sales of between 4-6% in the second half of 2018," it said in a statement.
Analysts expect this year to be the sixth consecutive year of margin decline at the operating level due to foreign currency effects.
Some analysts have suggested Inditex is cutting prices to remain competitive as others adapt its fast fashion model, where catwalk looks are speeded to shop rails in a matter of weeks.
Inditex stock has fallen 12% so far this year and took a tumble in August when Morgan Stanley cut its price target and gave it an "underweight" rating for the first time in the investment bank's 17 years of covering the stock.
Morgan Stanley said the Zara owner was rapidly maturing after years of aggressive expansion, was becoming increasingly sensitive to foreign currency effects and was suffering rising competition from online retailers.
