Inditex, Europe's biggest clothing retailer and owner of the Zara chain, reported a 25 percent jump in 2007 net profit on Monday and gave healthy sales figures for the new year so far.
The fast-growing group said net profit was 1.25 billion euros ($1.97 billion), just outperforming a forecast of 1.22 billion euros in a Reuters Estimates poll of 24 analysts, helped by a weaker dollar and strict cost control.
It said store sales in local currencies had increased by 17 percent from Feb. 1 to March 23, a figure which one analyst said would help propel shares higher at the open.
"We're talking around 4.5 percent like-for-like, so that's the single-most positive thing," said Anne Critchlow, retail analyst at Societe Generale. "I'd expect (shares) to outperform on that. I think the company has reassured today."
Inditex did not comment on how Spanish consumer spending was faring. Nearly 40 percent of Inditex's sales come from Spain, where slowing economic growth is eating into retail sales.
Asked how an economic downturn would affect sales in Spain, Marcos Lopez, Inditex's director of capital markets, said it was not the company's policy to comment on macroeconomic data.
Inditex, whose stable of stores spans trendy teen brand Bershka to upmarket Massimo Dutti, said sales rose 15 percent to 9.44 billion euros, slightly below a polled forecast of 9.56 billion euros.
The company said it would open between 560 and 640 stores this year, and launch its new accessories concept Uterque in the second half.
Lopez said 2008 would be the consolidation of its cost cutting and ruled out the outsourcing of more production to Asia like some retailers.
"What is very important is to keep a balance -- 50 percent source in proximity and 50 percent in origins -- as has been our structure since the company was built," said Lopez.
Inditex shares have fallen over 15 percent since the beginning of the year, underperforming the DJ Stoxx index of European retail stocks for most of the year, as investors fret about a slowdown in Spanish sales.
Inditex currently trades at around 16 times 2008 estimated earnings, a slight discount to archrival fashion group Hennes & Mauritz of Sweden, according to Reuters Estimates data.