Inditex, the world's biggest clothes retailer and owner of Zara, reported a 9 percent rise in first-half profit on Wednesday but its gross margin as a percentage of sales slipped because of a stronger euro. Inditex's profits are sensitive to fluctuations in the currency as it makes most of its clothes in the euro zone to respond quickly to fashion trends but generates more than half of its sales in countries outside the currency bloc.

The decline in its gross margin meant Inditex missed forecasts for second-quarter earnings before interest and tax (EBIT), analysts said, and the Spanish firm's shares fell as much as 3 percent after the results before recovering slightly. Shares in Swedish rival H&M, which has the majority of its sourcing costs in US dollars, rose 0.5 percent. Inditex said its gross margin as a percentage of sales fell to 56.4 percent from 56.8 percent in the first six months of its financial year, which runs from February 1 to July 31. Its first-half net profit of 1.37 billion euros ($1.6 billion) was slightly short of expectations while earnings before interest, tax, depreciation and amortisation (EBITDA) came in at 2.29 billion euros, up 9 percent from a year earlier.

Copyright Reuters, 2017