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Weak euro boost for Zara

Wednesday, June 10, 2015 - 01:39

Spain's Inditex, the owner of Zara fashion stores, reports a better than expected rise in quarterly profit. As Ciara Lee reports Europe's largest fashion retailer was helped by a recovering European economy and the weak euro.

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A recovering European economy and a weak euro - it's a winning combination for Spain's Inditex. The owner of Zara fashion stores has reported a better than expected rise in quarterly profit. Inditex makes more of its garments in the euro zone than its competitors so has benefited as the euro has tumbled against the dollar. Its business model of sourcing closer to its major markets in Europe allowed it to respond quickly to warmer than usual weather in Spain, and cooler conditions in other European countries. Will Hobbs is from Barclays Wealth. (SOUNDBITE) (English) WILL HOBBS, HEAD OF EQUITY STRATEGY AT BARCLAYS, SAYING: "For the euro you may attract a little bit more tourism at the margin I guess and that may have been helpful for the retail sales and broader consumption picture. But it feels like the prospects for Europe across the board are brightening a little bit, particularly with that turn in the labour market." Net profit rose 28 percent to 521 million euros between February and May. And the good news continued with sales picking up further in May and June, rising 13.5 percent since February. Rival H&M also reported strong results. It posted a10 percent rise in sales in April and is expected to post an 8 percent increase for May. In contrast, fashion group Gerry Weber issued a profit warning, blaming a shrinking German market and unseasonable weather. Inditex shares, which are already up 26 percent so far this year, were down 0.3 percent in early trade, in line with the European retail sector. Success may be mostly at home but the company says Zara will launch online shopping services in Taiwan, Hong Kong and Macau in 2015.

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