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New stores pep up Inditex sales

Sales at Spanish fast-fashion group Inditex, which runs the Zara, Massimo Dutti, Bershka and Pull and Bear chains, rose 12% to £2.2 billion (£1.74bn) for the first quarter of the year.

The company said net income had also risen 10% to 219 million (£173.5m) for the period.

The results were broadly in line with analysts’ expectations, although some said that like-for-like sales were likely to be flat, representing a sharp slowdown compared with the first half of last year.

Gross margin also increased and was 11% higher than at the same period last year, equating to 57.8% against 56.4% in 2007.

Trading since the start of the second quarter is in line with management expectations. Store sales in local currencies increased by 14% between February 1 and June 8. Inditex opened 145 stores over the period against 114 openings for the first quarter in 2007. Earlier this month Inditex opened its first Pull and Bear store in the UK in Liverpool.

Inditex has 3,890 stores across 70 countries. Between 560 and 640 net openings are planned during 2008. Inditex expects like-for-like sales during the financial year to be up 4%, despite a difficult market and a slowing Spanish economy.

Shares in Inditex have fallen more than 20% this year, which is a greater decline than at rivals H&M and Gap.

Luca Solca, an analyst at Bernstein, said: “The market seems to be sceptical about the short-term prospects for Inditex, with strong short-selling interests building up on the stock. Regardless of the short-term uncertainty concerning the consumer backdrop, we remain buyers of the stock in the low 30s [euros].”

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