Belt tightening

11 September 2019 By Dasha Afanasieva Follow @dasha_reuters

The Zara owner’s strong first-half sales growth was overshadowed by downward pressure on its gross and operating margin in the second quarter. Investors’ concern about the cost of growing revenue may be valid but a widening valuation discount to peer H&M seems harsh.

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Clothing retailer Inditex on Sept. 11 reported net sales of 12.8 billion euros for the six months to July 31, an increase of 7% from the same period of 2018. Like-for-like sales grew 5% and were positive across all concepts and all geographies, in both stores and online, the owner of Zara and Bershka said. The company said it expected like-for-like sales growth of 4-6% for the full year.

EBITDA in the first half was 3.4 billion euros compared with 2.3 billion euros in the first half of 2018. After excluding the impact of new accounting rules that took effect earlier in 2019, EBITDA increased 8%.

Shares in the Spanish retailer fell 3.3% by 0730 GMT on Sept. 11.

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