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Inditex wins the quarterly game to H&M

By FashionUnited

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Inditex, the owner of the Zara chain, posted first-quarter sales

of €2.9bn (£2.5bn), up from €2.6bn last year. Net income was €332m, up 10pc on last year. Polo Ralph Lauren and H&M were among the listed apparel companies that released quarter results Wednesday.

Europe’s two top fashion retailers, Spain’s Inditex and Sweden’s H&M, both unveiled sales figures Wednesday, helping  FashionUnited Top 100 Index to close up at 1289.88, (+16.98). Inditex said that it opened 110 shops over the quarter, taking its total number of stores to 5,154 in 78 countries. The expansion strategy included Zara's first store in Australia. The Spanish retailer's expansion will continue over the year. Inditex – whose chains also include Bershka and Massimo Dutti – will soon open its first shops in South Africa, Taiwan and Peru.

Although the two companies posted similar growth in local currencies (H&M reported 12% growth from March 1 to May 31 and Inditex, owner of the Zara fashion chain, recorded 11% sales growth in the period from February 1 to June 12), while the world largest fashion retailer´s sales soared, sales at H&M, the world's second-biggest clothing chain with 2,300 shops, said that sales rose by 2pc in May, behind expectations for a 5.4pc increase.

Both H&M and analysts blamed the strong Swedish krona, as translated back to the Swedish krona, H&M’s second quarter sales rose by a magre 2%, disappointing analysts and shareholders alike. Inditex, in comparison, matched revenue estimates.

Despite a slight recent dip, the krona trades at about SEK9.14 against the euro compared with SEK9.55 against the euro at the same time last year. H&M explained that this is a mere translation effect, as earnings are brought home to Sweden. Also, 95% of its operations are outside Sweden, with most of its clothes sourced in dollars and most of its apparel sold in euros.

International expansion also helped fashion retailer Ted Baker to post a 15pc leap in total sales over the past 19 weeks as the group shrugged off the impact of rising cotton costs. The firm which has concessions in department stores in America, Spain and Portugal opened new stores in Manchester, Paris and Hong Kong this year and has ambitious plans to break into China.

Although the firm did not reveal profit figures, Ted Baker did warn that "retail gross margin is slightly below last year due to the mix of product sales and a higher level of promotional activity in our markets".

Founder and chief executive Ray Kelvin said: "The group has made a good start to 2011. Our collections have been well received as we continue to expand the brand into new territories. In the second half, we plan to open stores in the UK, New Zealand, China and America."
FashionUnited