Inditex posts 27 percent rise in nine-month profit

Spain's Zara owner Inditex shrugged off sluggish spending in austerity-wracked Europe on Wednesday, posting a 27 percent rise in nine-month net profit to 1.65 billion euros, driven by a nimble production model and expansion into fast-growing markets.

The world's largest clothing retailer grew core profit - or earnings before taxes, interest, depreciation and amortisation (EBITDA) - by 25 percent to 2.78 billion euros ($3.61 billion).

A Zara store in Beijing
Sales climbed 17 percent to 11.36 billion euros as the company opened stores in fast-growing markets such as China, reducing its reliance on its home market Spain, where consumption is being squeezed in the second recession in three years.

The results were in line with a Reuters survey, which had forecast profit for the February-to-October period of 1.65 billion euros, EBITDA of 2.77 billion euros and sales of 11.33 billion euros.

Debt-free Inditex has steered its way through the global credit crunch and subsequent downturn better than many rivals, with its mix of cheap local suppliers in places like Portugal and Morocco allowing it to adapt to rises in labour costs in Asia.

Its production model, which enables the retailer to get designs from sketchbook to store within a fortnight, placed the group well to react to cheaper trends and changing material prices.

Inditex is trading at 23 times 2012 earnings compared with rivals H&M at 19 times and GAP at 12.

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