Zara owner feels pain of recession

The owner of fashion chain Zara today reported sliding sales and falling profits as it felt the pain of the recession in the retail market.

Inditex - Europe's largest clothing retailer, which also owns fashion chain Massimo Dutti - also said Zara will go online during the Autumn-Winter 2010 season for the first time.

It said reported same-store sales fell 2% in the six months to the end of July this year.

Profits were down 3% from €822 million (£723 million) in the first half of last year to €799 million for the same period this year - although this was better than the €780 million expected by analysts. Shares in the company rose 3% on the figures.

"Tight cost control is key to these better-than-forecast figures," said Credit Suisse analyst Tony Shiret. "The second quarter is the first in two years where costs have grown slower than sales. This is a major turnaround."

The Spanish retailer has been hit hard in its home country where the recession has sent unemployment soaring more than in the UK.

It said total sales at its 4430 stores, which it has in 73 countries, were up 9% since the start of August.