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Profits flat at Zara owner Inditex

The Spanish owner of high street fashion chain Zara saw annual profits growth grind to a halt as it revamped flagship stores and expanded its global reach.

Inditex added another 331 stores on a net basis, taking its total to 6,340 in the year to January 31, while also refurbishing 100 of its key outlets and rolling out its online presence worldwide.

Underlying earnings remained flat at 3.9 billion euros (£3.3 billion) and it saw like-for-like sales growth slow to 3% from 6% the previous year.

But the group signalled a bounce back since the year-end, with store sales surging by 12% between February 1 and March 15.

It said the overall performance of the spring/summer season would hinge largely on the upcoming Easter period.

Analysts had expected the firm's bottom line growth to be impacted as it also faced the impact of currency depreciation outside the eurozone.

Inditex, which also trades as Massimo Dutti, Bershka and Pull and Bear, spent 1.2 billion euros (£1 billion) in 2013 on its expansion and refurbishment drive and said it would ramp this up over the year ahead, to 1.35 billion euros (£1.1 billion).

It has been reducing its reliance on the group's economically challenged Spanish home market in recent years after the country was hit hard by the global financial crisis, instead setting its sights on emerging markets such as Asia, which now accounts for more than a fifth of all sales.

The group said its online offering now covers "most of the Northern Hemisphere", with web launches including Zara in Canada last March.

It plans to go live with Zara in South Korea and Mexico later this year, taking its online presence to 27 markets.

There are around 100 stores in the UK, with two thirds under the Zara brand. The company does not provide a regional breakdown on its trading performance.

Inditex launched in 1975 when it opened the first Zara store in Spain. It initially expanded throughout Spain before setting its sights overseas, moving to the US in 1989 and the UK in 1998 along the way.

It now operates in 87 markets and employs more than 128,000 people worldwide after adding another 8,000 staff in the year to the end of January.

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