Shares of Spanish fashion group Inditex fell more than 4.0 percent on account of slower net profit growth during the first nine months of its fiscal year. However, the fashion conglomerate reported net profit of 2.4 billion euros (US $ 2.7 billion) for the first nine months of its financial year, up 4 percent on the year and maintained guidance for the second half of the year.
Inditex disappointed investors who were expecting a strong run-up into upcoming holiday season as it resisted discounts.
Inditex shares fell to 25.11 euros in early afternoon trade, after being down as much as 6 percent. The Ibex-35 index of most traded shares was up 1.07 percent.
The firm, which launched online sales for Zara in 106 new markets in November, said that the period was marked by an “extraordinarily warm September” in Europe. It also said that it had not discounted clothing from September which has resulted in gross margin growth of 108 basis points during the third quarter.
Asked why Inditex did not follow the example of rivals who slashed prices, chairman Pablo Isla defended the company’s decision to not follow suit and said, “Inditex’s business model execution was satisfactory in the third quarter of 2018”.
Inditex now trades from 7422 stores across 96 markets, having opened locations in 51 markets throughout the nine months.
