International markets struggled Wednesday and drained FashionUnited Top 100 Index,
which closed at 1,269.37 down by 5.54. The Japanese market ended Wednesday's trading session in a mixed fashion with the benchmark Nikkei 225 index ending in negative territory, while its neighbouring Hang Seng, based in Hong Kong, ended the trading session with a general Chinese shares sunk, particularly in Hong Kong, paced declines in Asian stock markets as the latest data from US and Japanese central banks failed to bolster confidence.
European stocks fell Wednesday, along with the euro, as the euro zone's sovereign-debt problems were highlighted again by the decision of Moody's Investors Service to put Spain's Aa1 local and foreign-currency government bond ratings on review for possible downgrade.
However, one the Spanish Inditex’s net sales increased by 14% in the first nine months of its 2010 fiscal year –from February 1 to October 31 – to 8,866 million euros. Nine-month net income rose by 42% from the same period a year earlier to 1,179 million euros. Gross profit climbed by 20% to 5,307 million euros, bringing the gross margin to 59.9%. Inditex expanded its retail network with 300 new stores in 45 countries in the first nine months. Consequently, as of October 31 the Group reached a total number of stores of 4,907 stores in 77 countries. A key highlight of this expansion is the Group’s number of store openings in Asian markets. In the period, Zara unveiled eight new stores in Japan, eight in South Korea and 42 stores in China. In China, the Group debuted stores in cities such as Chengdu, Xian, Shenyang, Dalian, Chongqing, Hohhot, Wuhan and Xiamen, in addition to a landmark store in the Hong Kong airport. The Group now operates in 28 cities across China, with 140 stores of the Zara, Massimo Dutti, Bershka, Stradivarius and Pull&Bear concepts. The Group’s remaining commercial formats are scheduled to be launched in China in 2011. The Spanish group, owner of the ubiquitous Zara brand, signaled a slowdown in underlying sales as it met forecasts with a 42 percent jump in nine-month net profit. After their figures made public Wednesday, Inditex shares, which have surged around 45 percent this year, were down 3.6 percent at 60.19 euros, one of the biggest declines among European blue-chip companies.
Spanish textile emporium earnings were driven higher by rapid expansion in fast-growing Asian markets and a focus on affordable fashions. But sales in local currencies were up 10 percent from August 1 to December 12, a figure which some analysts said amounted to a slowdown in recent weeks after stripping out new store openings.
"This does not bode well”, said SG analyst Anne Critchlow to Reuters.
In the meanwhile, Zara’s direct competition, H&M, saw in November how its sales in local currencies including VAT increased by 17 per cent compared to the same month previous year. In comparable units sales increased by 8 percent, the company unveiled Wednesday. The total number of stores amounted to 2,206 on 30 November 2010 versus 1,988 on 30 November 2009.Shares in Sweden's Hennes & Mauritz Europe's No.2 clothing retailer, were also dragged lower despite reporting a rise in same-store sales for November, that came in just ahead of analysts' expectations.