MADRID: Zara owner Inditex plans to keep up the pace of expansion in China and strengthen its global online business as the Spanish home market becomes ever less important for the world’s largest clothing retailer.
The brainchild of Spain’s richest man, Amancio Ortega, Inditex has more than 6,000 stores across some 86 countries and has been opening them at a pace of about five per month in China since 2006 to serve the rapidly growing middle class.
“We see that continuing for a few years,” Capital Markets Director Marcos Lopez told Reuters in a telephone interview after Inditex posted a 27 percent rise in nine-month net profit to the end of October.
Inditex still makes 20 percent of its sales in Spain, but customers are being squeezed by the second recession in three years with one in four workers jobless. Inditex said it would not put up prices in response to the rise in value added tax from September, potentially affecting profitability.
Meanwhile, Inditex has already opened 72 stores in China in the nine-month period, bringing its total there at the end of October to 347 and helping to lift net profit to 1.65 billion euros.
“The combination of accelerated store openings in the higher-growth Asian and emerging markets and the rollout of the group’s online capability should continue to deliver GDP-plus Inditex like-for-like sales growth,” said Citi in a note.
China’s upper middle class, with average household earnings of $ 40,000 a year, could grow by 2020 to 280 million people — nearly six times Spain’s current population, according to Boston Consulting Group.
Inditex opened 360 stores globally in the nine-month period, increasing sales by 17 percent to 11.4 billion euros.
Inditex only ventured online in 2010. It launched its flagship Zara brand online in China in September and said yesterday it would start Internet sales in Canada in the first half of 2013.
Without the debt of many Spanish companies, Inditex has fared better than many rivals in the downturn and analysts widely believe it has taken market share locally from more expensive brands and independent stores forced to shut.
Lopez said Spanish market share was as high as 12 percent for its eight brands, ranging from flagship Zara to teen brand Bershka. A production model that can turn designs from sketchbook to store within a fortnight has given it another edge.
Core profit — or earnings before taxes, interest, depreciation and amortization (EBITDA) — rose 25 percent to 2.78 billion euros.
Inditex trades at 23 times forecast 2012 earnings compared with rivals H&M at 19 times and GAP at 12.
H&M’s sales for November are expected to shrink again after a surprise drop in October, a Reuters poll showed.
Inditex shares, which have risen 65 percent in 12 months, were up 0.2 percent at 1349 GMT to 103.8 euros.
Zara owner Inditex marches on in China
Zara owner Inditex marches on in China
Closing Bell: Saudi main index extends gains as market opens wider to foreign investment
RIYADH: Saudi Arabia’s Tadawul All Share Index rose on Monday, gaining 153.61 points, or 1.38 percent, to close at 11,321.09.
The total trading turnover of the benchmark index was SR5.85 billion ($1.56 billion), as 207 of the listed stocks advanced, while 55 retreated.
The MSCI Tadawul Index increased, up 21.20 points or 1.41 percent, to close at 1,524.18.
The Kingdom’s parallel market Nomu gained 278.13 points, or 1.17 percent, to close at 24,013.03. This comes as 43 of the listed stocks advanced, while 29 retreated.
The best-performing stock was Saudi Pharmaceutical Industries and Medical Appliances Corp., with its share price surging by 7.26 percent to SR28.94.
Other top performers included Rasan Information Technology Co., which saw its share price rise by 6.51 percent to SR144, and Knowledge Economic City, which saw a 6.25 percent increase to SR13.09.
On the downside, the worst performer of the day was Najran Cement Co., whose share price fell by 2.11 percent to SR6.49.
Almasane Alkobra Mining Co. and Saudi Cable Co. also saw declines, with their shares dropping by 2 percent and 1.88 percent to SR103.10 and SR166.80, respectively.
On the announcement front, Riyad Bank has announced its annual financial results for 2025, with the total income from special commission of financing reaching SR24.1 billion, while net income from special commission of financing amounted to SR12 billion.
In a statement on Tadawul, the bank said: “Net income increased by 11.7 percent mainly due to an increase in total operating income and a decrease in total operating expenses.”
The bank further noted that the rise in total operating income was primarily driven by increased revenue from fees and commissions, trading activities, special commissions, gains on non-trading investments, and other operating sources. This growth was partially tempered by declines in exchange and dividend income.
“Net provision of expected credit losses and other losses decreased by 15.8 percent due to a decrease in impairment charge of credit losses and impairment charge for other financial assets, partially offset by an increase in impairment charge for investments,” it added.
RIBL’s share price closed at SR18.18 on the main market, marking a 1.43 percent increase.
