Pre-tax profits at Zara’s UK business fell by 34.5% to £33.9m last year, as rising costs outstripped its sales growth.
Total sales rose 3.4% to £457.8m, but the gross margin narrowed to 54.7% from 57.4% and the cost of goods for sale rose 10% to £207.6m, the Guardian reports.
Sales and distribution expenses increased 7.2% as Zara refurbished three large stores in London and Manchester and about 10 smaller branches.
The annual dividend Zara UK paid to its parent company Inditex reduced to £22m from £30m a year earlier. However, the retailer said there was no relationship between that and the fall in profit.