Inditex, Next beat H1 forecasts

By James Davey and Judy MacInnes

LONDON/MADRID (Reuters) - Tight management of costs and stocks and better than expected summer sales helped two of Europe's top fashion retailers beat first-half profit forecasts on Wednesday, although there was some caution about the trading outlook.

Inditex (ITX.MC), owner of the Zara chain and Europe's biggest clothing retailer, reported a shallower than expected 7.6 percent fall in net profit and also announced long-awaited plans to launch Zara online next year.

Next (NXT.L), Britain's second-largest fashion chain, posted a 6.9 percent rise in first-half pretax profit and raised its full-year guidance, though it remained cautious on the outlook for consumer spending as unemployment climbs.

Bernstein analyst Luca Solca said both results showed the benefits of careful cost control and stock management, as well as favourable weather, and expected full-year consensus profit forecasts for both companies to rise.

He was particularly encouraged by Spanish group Inditex's plans to take Zara onto the Internet, saying a similar move by rival Hennes & Mauritz (HMb.ST) had given a big boost to sales.

"This is going to make consensus more positive about prospects for Inditex," he said, keeping an "outperform" rating on Inditex shares and a "market perform" on Next.

At 8:25 a.m. Inditex shares were up 2.9 percent at 39.73 euros and Next was up 2.2 percent at 1,736 pence, both beating a 0.3 percent rise on the DJ Stoxx European retail index .SXRP.

Europe's clothing retailers have mostly had a tough time in the economic downturn, and while there are signs the recession is over in some countries, there are fears that consumers will hold back from discretionary spending to rebuild savings.