Zara Owner Inditex Outshines H&M With Better-Than-Expected First-Half Sales

Spanish retailer Inditex posted first-half earnings that exceeded expectations as the owner of the Zara and Massimo Dutti clothing chains keeps expanding online and into new geographies.

The world's largest fashion retailer said that first-half operating profit rose by 8% to €1.61 billion ($1.80 billion), beating the Bloomberg News consensus forecast of €1.58 billion.

Same-store sales rose by 11% in the first half to €10.47 billion, as net profit increased 8% to €1.26 billion.

Inditex shares were recently down 0.58% at €32.49. The stock is up 9.91% over a year ago, far outshining Swedish rival Hennes & Mauritz (HNNMY) which is down 19.23% over the same period in Stockholm.

Inditex, whose other brands include Pull&Bear, Bershka, Stradivarius and Oysho, is pursuing a two-pronged expansion strategy.

Chairman and CEO Pablo Isla in a statement underscored "the importance of its model which fully integrates bricks-and-mortar stores and online," saying they are both "seamlessly connected, driven by platforms such as mobile payment, and other technological initiatives that we will continue to develop."

All brands increased their international presence in the first half, with 83 new stores in 39 country, bringing the tally to 7,096 total stores. During the period, the group entered three new markets - Aruba, Nicaragua, and Paraguay. After opening the first Zara outlet in Vietnam in September, the group now boasts a presence in 92 markets.

Also during the first half the group expanded its online offering to 11 countries, including in the Baltic region and Central and Eastern Europe, giving it s presence in 39 markets. And on Oct. 5, it will also have an online presence in Turkey.

Parallel to the e-commerce rollout, the company in September launched mobile phone payment at all the group stores in Spain, which it plans to gradually extend to other countries. Customers can use apps to for eight of Inditex's brands and a specific app for the whole group called InWallet. The apps allow customers to manage their receipts electronically.

The second half looks just as promising, with sales from Aug. 1 to Sept. 18 up 13% in local currencies.

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