Shares in Spanish fashion giant Inditex plummeted up to 16 per cent on Friday after it posted a sharp rise in first half net profit but warned of declining margins in the second half.

The owner of the popular Zara fashion chain said its six month profit jumped 21 per cent year-on-year to 146.1 million on the back of a 19 per cent rise in revenues to 1.98 billion euros from last year.

But the Galicia-based company said its gross margin had fallen 1.2 percentage points to 50 per cent from last year and added it was likely to fall one to 1.5 percentage points year-on-year in the second half.

For the first seven weeks of the second half, Inditex said same-store sales were below expectations, because of the recent heatwave in Europe which coincided with the launch of a new collection and strong year-ago results.

The group opened a net 137 stores in the first half and increased its forecast for full-year store openings to between 300 and 360 from an earlier forecast of 280 to 335.