Zara owner Inditex reported a better start to its autumn sales on Wednesday, an encouraging sign as the world’s biggest listed fast-fashion retailer grapples with the impact of a weak dollar and US tariffs on consumer spending.
Sales from August 1 to September 8 grew 9 percent in currency-adjusted terms compared to a year ago, picking up in pace from 5.1 percent growth over the first half. Shares in Inditex, which have fallen this year, gained 6 percent in early trading.
The start to the third quarter was an improvement after sales for the second quarter ended July 31 came in at €10.08 billion ($11.81 billion), below the €10.26 billion expected by analysts, according to an LSEG estimate.
A weaker US dollar was partly to blame, as Inditex said currency changes would erode sales by 4 percent in 2025, more than the 3 percent impact it previously expected. A weaker dollar means sales in the US – Inditex’s second-biggest market by revenue after Spain – are worth less in euro terms.
“Even without the currency impact, sales growth was slightly worse than we were expecting,” said Sara Herrando Deprit, analyst at Kutxabank Investment.
However, she added, “the second half of the year is the important one for Inditex, so it’s a good sign that sales growth starts to be a bit stronger.”
CEO Oscar Garcia Maceiras said the first-half performance was solid in a “complex market environment.”
Sales growth is improving over the course of the year, Garcia Maceiras told analysts on a call, adding that the results “demonstrate the strength of the model.”
Uncertain Consumer Environment
Primark on Wednesday said it expects the consumer environment to remain uncertain, underscoring the challenge for clothing retailers to convince shoppers to spend.
Despite the currency impact, Inditex maintained its gross margin for the first half at 58.3 percent – the same level as last year – on a gross profit of €10.7 billion.
“A largely unchanged gross margin underscores the group’s ability to trade through a tricky spring/summer season across Europe,” Jefferies analysts said in a note.
US President Donald Trump has hiked tariffs on imports from a swathe of major trading partners, driving many clothing and sneaker retailers who source from factories in Asia to hike US prices as they try to offset higher costs.
Shares in Inditex have declined since the start of this year as investors adjust to a deceleration after four years of double-digit annual sales growth.
The slowing in sales growth has prompted questions about the strength of demand for Zara clothing, and the extent to which it would be able to raise prices in the US to protect its margins.
The Spanish company, which also owns retail brands Pull & Bear, Massimo Dutti, Bershka, Stradivarius and Oysho, has steadily gained share in the global apparel market since the COVID pandemic, according to estimates from Euromonitor, while Swedish rival H&M has struggled to grow.
Inditex’s success is largely down to its supply chain enabling it to quickly bring new, on-trend clothes into stores, investors say, and it is investing €1.8 billion into its logistics over 2024 and 2025.
Inditex also announced an investment in Theker Robotics, an AI-driven logistics automation company, without disclosing the amount.
By Helen Reid; Editors: Inti Landauro, Jamie Freed, Bernadette Baum
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