Zara owner Inditex profits up 5%

Spanish fashion giant Inditex has reported a 5% rise in annual net profit to €2.5bn (£1.8bn), thanks to a recovery in consumer spending.

The owner of the Zara fashion chain said like-for-like sales, which compare sales at stores open for at least a year, also rose 5%.

The retailer plans to open new stores in London, Barcelona and several US cities, including three in New York.

The company said it expected to open 420 to 480 new stores this year.

Inditex also said it would invest about €1.35bn this year, compared with €1.24bn in 2014.

It said the bulk of this investment continued to be earmarked for new store openings and the refurbishment and expansion of existing stores.

It confirmed a strategy of closing small stores and concentrating on larger flagship stores, such as the recent purchase of a building in New York's SoHo, which will house a new flagship Zara store.

The firm said up to 100 smaller stores would close this year.

Inditex's biggest challenge at present is to keep up with online-only fashion websites, including Germany's Zalando and the UK's Asos.

When it published half-year results in September, Inditex said Zara would be selling direct over the internet in 27 markets by the end of the month.