H&M Gaining Ground Over Inditex Zara?

Spanish Inditex Group generated net profit of €951 million, 1% more than last year. Sales increased by 6% to €7,655 million, not including their new shops in life-for-life sales, which would diminish the percentage to 2%. Had it not been for the exchange rate effect, sales would have risen by 8%. It is important to mention that Inditex opened stores in 40 different markets throughout 2013. Gross margin was of €4,486 million, i.e. +4%, and represents 58.6% of sales. EBITDA went from €1,621 to €1,624 million since 2012.

Despite the good overall performance, some Spanish market watchers are disappointed because they expected higher numbers. Experts at Renta 4 Banco consider that “markets will respond negatively to Inditex results.” They expected 0.4% more in income, 1.7 more in gross margin, 4% more in net profit and 3.4% more in EBITDA.

On the other hand, experts at Bankinter Broker consider Inditex’s results have exceeded expectations and add, “the increase in sales starts to return to double digit”. For its part, Sabadell analysts are more neutral, and say that these results are in line with expectations. “Their numbers are positive, but the price won’t be boosted in the stock exchange,” they add.

Are other clothing firms like Swedish H&M (Zara’s biggest rival) gaining ground over Amancio Ortega’s group?

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