Inditex, the Spanish retail giant and owner of the expansionist Zara chain, is expected to deliver a 9.8% jump in nine-month operating profits, Spanish broker Ibersecurities has forecast, adding that the group's outlook remains strong.
 
Operating earnings should rise to EUR790m (US$1.01bn) while sales revenues will soar 21.5% to EUR5.6bn, Madrid-based Ibersecurities said. It added that net profits will rise 6.4% to EUR554.3m.
 
Inditex is scheduled to report the period's results on 13 December.
 
Inditex's "well received" autumn collection and continued expansion efforts will boost the period's fortunes, Ibersecurities, which kept a "buy" rating on the stock, said in a research note.
 
The forecasts came as the A Coruna, the northern Spain-based textiles group introduced its Massimo Dutti and Bershka fashion chains in Moscow, Russia and opened new stores for Zara and its Pull and Bear and Stradivarius banners.
 
The company said it would expand into St Petersbourg in the future.
 
Ibersecurities, which has a EUR40.1 objective price for Inditex's shares, said the company's long-term future looks promising.
 
It said Inditex is likely to maintain its frantic expansion rate (which should reach 450 outlets this year) and that operating margins should increase 4-5% in coming periods.
 
Inditex's "flexible" business model and high turnaround speed reduces the impact that a botched collection can have on full-year earnings, Ibersecurities added.
 
The company's fashion-based model also keeps people at its stores all year round, not just during seasonal buying periods.
 
In addition, Inditex's strong cash position (of EUR770m) should help it ride out difficult market periods, according to the broker.
 
By Ivan Castano.