Fashion group Inditex is confident of continued success and profitable expansion across all of its markets despite a slowdown in space growth.
The Spanish fashion giant wants to open between 365 and 425 stores this year, with about half of these to open in Asia, where the group is continuing to ramp up openings. Its first stores in India will open in May.
Inditex, which runs fascias including Zara, Massimo Dutti and Bershka, beat analyst expectations with net profits up 5% to E1.3bn (£1.18bn) in its full year to January 31. Sales across the group soared 7% to E11bn (£9.95bn). Store sales from February 1 to March 14 were up 14% in local currencies.
Credit Suisse analyst Tony Shiret said: “Net space for the year closed 8% higher year on year. This is the lowest growth rate we can remember for Inditex going back to well before its flotation in 2001.
“Current year store number increases indicate another year of space increase at sub-10% levels.” He added Inditex has a recent history of underperforming initial space growth expectations.
“This shape is not unwelcome, but the much lower space growth may call into question the extent of the growth dynamic in this company, in our view,” he said.
However, Bernstein analyst Luca Solca believes slower space growth will be substituted by the virtual growth Inditex will gain from its etail site, which goes live later this year. “They have online, which will make tailwinds to its top line,” he said.
Solca forecasts annual growth of between 2% and 4% from the retailer’s ecommerce operation, which launches in key European markets and will roll out eventually to all of its markets.
Deputy chairman and chief executive Pablo Isla said that, by 2012, Inditex would operate in 80 countries. It currently has 4,607 stores in 74 countries. He said: “I am encouraged by the opportunity for Zara to go into ecommerce.”