Madrid, Spain – Zara-owner Inditex, the world’s biggest fashion retailer, reported a record first-quarter profit on Wednesday as strong sales offset the impact of high inflation on its production costs.
The Spanish group said its net profit jumped 54 percent to 1.17 billion euros ($1.25 billion) in the three-month period ending on April 30.
The result exceeded the 975 million euros forecast by analysts surveyed by financial services firm Factset.
Excluding a 216 million provision a year ago to deal with the consequences of Russia’s invasion of Ukraine, the firm’s profits were up 24 percent.
The result was welcomed by investors, with Inditex shares trading 5.85 percent higher on Spain’s Ibex 35 index at 0920 GMT.
The company attributed the figures to strong sales which reached 7.61 billion euros ($8.15bn) — 13 percent higher than in the same period in 2022 — and had shown a “very satisfactory development both in stores and online”.
Its pre-tax earnings reached 2.19 billion euros, up 14 percent from the same period last year, despite seeing its production costs rise sharply in recent months due to persistently high global inflation.
Inditex has 165,000 employees and owns seven brands including upmarket Massimo Dutti and teen label Stradivarius.
The fashion group has been impacted by the Ukraine war, forcing it to shut down its 514 shops in Russia, which was at the time its second-biggest market after Spain.
Following a deal in late October, the shops were sold to Emirati group Daher, which has business interests in retail and real estate and owns the Dubai Mall, one of the biggest commercial centers in the United Arab Emirates.
Given the results, the group — which over the past year has been run by Marta Ortega, daughter of Inditex’s multi-billionaire founder Amancio Ortega — said it was optimistic about the year ahead.
Inditex, which has just opened its first outlet in Cambodia raising its global number of shops to more than 5,800, also reported a strong start to the second quarter with sales up 16 percent between May and June.
“We expect increased sales productivity in our stores going forward,” it said.