By Elisabeth O'Leary
MADRID (Reuters) - Inditex (MADRID:ITX), the world's biggest clothing retailer, reported a brisk start to the autumn season on Wednesday after first-half profit rose by a quarter, sending its shares more than 3 percent higher.
The Spanish group, owner of the trendy Zara brand, said sales in local currencies in the six weeks to Sept. 10 jumped 16 percent, far outpacing the 1 percent growth rival Hennes & Mauritz saw in August, which it blamed on unseasonably warm weather in much of Europe.
Because Inditex sources its garments closer to where it sells them than most rivals, it is able to respond more quickly to changing demands, and even changing weather.
Sourcing a higher proportion of clothes in Europe also shields Inditex from the impact of a stronger U.S. dollar, the currency used by most Asian suppliers. It predicted currencies would give a 0.5 percent boost to sales over its full year.
"We are satisfied with the very strong start to the season in terms of both geographies and concepts ... and based on the flexibility of our business model," Chief Executive Pablo Isla told an analyst conference call
In the February to July period, sales climbed 17 percent to 9.42 billion euros ($10.61 billion), a like-for-like rise of 7 percent, as cheap oil and credit in Europe and Spanish jobs growth translated into more money in the pockets of shoppers.
Inditex shares, up almost a quarter this year, were up 3 percent at 0830 GMT, outpacing a 1.9 percent firmer European retail sector and a 1.2 percent increase for H&M.
"A stellar start to the quarter," said Bernstein analyst Jamie Merriman, noting that 16 percent growth for the past six weeks compared with 10 percent for the same period in 2014.
Growth was particularly strong for the core Zara brand, whose revenues rose 18 percent in the first half, and for furnishing brand Zara Home, up 22 percent. Tailoring outlet Massimo Dutti and accessories brand Uterque lagged.
Zara wooed fashionistas this summer with a new take on 70's styling -- long hippy dresses, florals and tassels.
The group's sales are becoming more evenly spread, with Asia accounted for 25 percent of the total in the first half versus 22 percent a year ago, while Europe now contributes 60 percent versus 65 percent one year ago.
Isla said store growth would continue to be "significant" in China in the coming years, but said little more despite recent concerns over Asia's economic health.
Net profit rose 26 percent to 1.17 billion euros, in line with expectations in a Reuters poll. Gross margin of 58.1 percent is expected to stay broadly stable in the rest of the year.
