Retail in Asia

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Foreign retail raiders feel the pain in Australia

Domestic fashion retailers in Australia struggling to maintain profits in the face of rising costs and competition could be forgiven for schadenfreude.

Zara, the first of almost a dozen global fashion brands to invade Australia, has suffered a 33 percent slump in profits in Australia despite opening a string of new stores. According to accounts lodged with ASIC, earnings before interest and tax at Group Zara (Australia) fell 33.1 percent to AUD15.5 million (USD11.9m) in the 12 months ended January despite a 26.8 percent rise in sales to AUD179 million.

Still, Zara is faring better than its slightly smaller Swedish rival H&M, which lost AUD2.89 million before interest and tax in the 12 months ended November on sales of AUD68 million.