"The season has been positive in terms of the gross margin evolution with this 12-basis-point gross margin increase in line with our guidance," Chairman Pablo Isla told a conference call. The dampened margin growth could be due to foreign currency effects and a "less strong trend in full price sales", said RBC Capital Markets analyst Richard Chamberlain, who estimated a 22 basis point fall in gross margin in the second quarter.
A stronger euro can drag on profits as the group generates more than half of its sales in other currencies and then books those sales in euros when reporting results. Sales - in stores and online - increased 8% in the first five weeks of the latest financial period. Inditex, which also owns brands Massimo Dutti and Bershka, reiterated its full-year sales growth forecast of 4% to 6%.
The Spanish retailer reported net profit of 1.55 billion euros ($1.66 billion) for the six months from Feb. 1 to July 31, on sales up 7% at 12.82 billion euros, broadly in line with analysts' expectations.