Inditex, the parent company of Zara, announced a significant rebound in sales for its initial autumn-winter collections on Wednesday, counteracting a slower sales period earlier in the year that matched analysts’ predictions.
The fashion behemoth reported an 11% increase in sales on a constant currency basis from August 1 to September 8 compared to the same period last year. This surge helped to mitigate the deceleration experienced during the first half of the year.
For the first half of the fiscal year, which concluded in July, Inditex saw a 10% increase in profit, with sales rising by 7.2%. While the growth rate was slower than the previous year, it was consistent with analysts’ forecasts, which had anticipated challenging conditions for fashion retailers in Europe. This slowdown was partly attributed to unusually wet weather during the early summer months.
Despite the adverse weather in June, Inditex achieved net income of €2.8 billion ($3.09 billion) and sales of €18.1 billion for the first half of the year. Analysts surveyed by LSEG had projected a profit of €2.77 billion and sales of €18 billion.
Analysts from HSBC, RBC, JPMorgan, and Bestinver had predicted a rebound in Zara’s sales, anticipating double-digit growth in the initial weeks of the third quarter starting in August. This forecast came after a disappointing second quarter due to adverse weather conditions in Spain, Zara’s largest market.
To maintain its competitive edge against rivals such as H&M and the rising Chinese competitor Shein, Inditex has been investing heavily in logistics and technology. This strategy aims to accelerate the delivery of fashion trends while minimizing price increases on everyday items.
In contrast, H&M reported a projected 6% decline in June sales in local currencies, attributed to poor weather across many markets. Similarly, Primark experienced reduced summer sales in Britain due to the unfavorable weather.
Fund manager Vera Diehl of Union Investment praised Inditex for its strategic foresight, stating, “I don’t focus on short-term fluctuations but rather on a three-to-five year horizon. Inditex remains the leading fashion retailer both in physical stores and online.” Diehl highlighted that the company’s strategic decisions continue to widen its lead over competitors like H&M and Shein.