Zara owner Inditex expects profit margin growth in H2

Leading retail group Inditex, the parent company of Zara has reported a 3 percent rise in first-half profit on Wednesday and a rise in gross margin despite a stronger euro.

Inditex's profits are sensitive to fluctuations in the currency as 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, which also owns upmarket label Massimo Dutti and underwear label Oysho, said its first-half gross margin had risen 4 percent 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 end-July of 12 billion euros ($14 billion), up 3 percent on year, yielding net profit of 1.41 billion euros.

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 and 6 percent in the second half of 2018," it said in a statement.

(Source: REUTERS)