Zara Owner Is Better Fashion-Stock Trade Than H&M, Citi Says

Analysts at Citigroup Inc. think there’s money to be made on the differing fortunes at two of Europe’s biggest clothing retailers.

The bank announced a “pair trade” recommendation on Friday, advising clients buy shares of Inditex SA while selling Hennes & Mauritz AB. Fewer discounts at Zara should benefit Inditex’s profit margins, while a jump in costs at H&M is under-appreciated by the market, Monique Pollard and colleagues wrote in a note.