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Zara stumbles in India

Spanish fashion company Inditex is finding India tough going now the novelty of Zara’s debut there has worn off.

Despite India’s rapidly growing middle class – and their burgeoning spending power – the joint venture retailing the Zara brand has reported its first decline in profit and its slowest sales growth since it entered the country in 2009.

Local analysts are blaming the weak Indian currency, “waning” novelty factor, discounting and the ongoing cost of expanding the store network.

Zara is sold in India by Inditex Trent, a JV between India’s diverse industrial giant Tata Group, and Inditex. The JV this week reported a 35 per cent fall in net profit for the year to March 2014 on sales which grew 41 per cent.

In the full 2013 year, Inditex Trent posted a 58 per cent increase in sales. Zara has 13 stores throughout the country, but more than half of its sales come from flagship stores in Mumbai and Delhi.

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