Sales Up 10.6% at Zara Parent Company Inditex in First Quarter

PARIS – Zara parent company Inditex continued its growth streak, even as sales slowed in the three-month period to April 30.

The Spanish fast fashion behemoth saw sales in the fiscal first quarter of 2024 rise 10.6 percent at constant currency to 8.2 billion euros.

That growth rate is a tick down from last year’s 15 percent first-quarter growth, and the full-year number of 18 percent growth at constant currency, as the company benefited from a high street shopping boom.

The sales numbers were just ahead of analysts consensus, with gross margin slightly softer than expected, “likely reflecting the impact of pricing” as the company has executed a slow and gradual price increase strategy.

“Inditex‘s differentiated business model has helped it to deliver strong outperformance during and after the pandemic,” said RBC analyst Richard Chamberlain.

“Inditex’s sales comparables now become tougher, partly due to consistently strong trends last year. We now expect trends gradually to normalize,” added Chamberlain.

The continuation of strong sales growth demonstrates Inditex’s strength against rival H&M, where sales have been flat for several consecutive quarters. High street fast fashion retailers have taken a hit from China-based, online, ultra-fast fashion distributors including Shein and Temu.

Strong sell-through in the quarter led to a 3 percent drop in inventory on hand.

Inditex, which also operates the upscale label Massimo Dutti; younger concepts Pull&Bear, Bershka and Stradivarius; lingerie and loungewear brand Oysho; and standalone Zara Home flagships, opened new stores in 23 markets in the period. By the end of the first quarter it had a total of 5,698 stores in 214 markets.

The company opened a new Zara in Athens, Greece, and reopened 48 stores in the period. Zara revamped its stores in Chicago and Paris, and expanded the retail offer at other brands, ranging from Massimo Dutti and Oysho to Zara Home.

Massimo Dutti also launched in China through a deal with

Momentum continued into the second quarter. From May 1 to June 3, sales at constant currency were up 12 percent year-over-year.

That result “is better than our forecast and against a tough comparable of 16 percent [in the same period in 2023]. This suggests some pent-up demand following a cool and rainy start to spring in southern Europe,” said Chamberlain.

Gross profit increased 7.3 percent to 4.9 billion euros. EBITDA rose 8 percent to 2.4 billion euros in the period, while net income was up 10.8 percent to 1.3 billion euros.

Operating expenses increased 6.4 percent, while the company has embarked on a massive logistics investment of 1.8 billion euros which was announced in March.

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