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Shares of Inditex surged on Wednesday as the Zara owner continued to defy the retail gloom in the third quarter, helped by cost tightening and online expansion.
The world’s largest fashion group ITX, +3.88% posted a 12% profit rise to €2.7 billion in the first nine months of the year and robust sales growth of 7.5%. Third-quarter net profit climbed 14%, while sales rose 7%. Shares rose nearly 3% in Madrid, making it one of the Stoxx Europe 600’s best performing companies on the day so far.
Inditex, or Industrias de Diseño Textil, trimmed its stock inventory by 5% but still managed to increase sales, ramping up its online focus over the period.
The company, which also owns Massimo Dutti, Bershka and Oysho, said it now expected full-year like-for-like sales growth of 4-6%.
The Spanish retail giant has been expanding its online presence globally, launching in eight countries in May, including Saudi Arabia, U.A.E. and Egypt.
Zara said it launched online in South Africa, Ukraine, Colombia and the Philippines in September and October and remained on track with further sales launches. Its online push has enabled the company to bounce back from a tricky start to the year caused by cold weather and a challenging retail environment.
Shares in the Spanish fashion company have now climbed more than 30% in 2019 against a tough backdrop for retailers around the world.
“There’s been little in the way of good cheer for retailers in general this year, however it’s not all doom and gloom, and Zara owner Inditex has been one of the few players in this space that has managed to cope with the changes to the retail environment,” Michael Hewson, analyst at CMC Markets, told clients in a note.
