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Zara owner Inditex benefits from increased Spring sales

Lifestyle and Fashion

Zara Inditex increased Spring sales

Zara's parent company, Inditex, increased its share price on Wednesday after reporting higher sales of its Spring/Summer collections.

The Spanish business made 12% more money from May 1 to June 3 this year compared to last year, leading to a 5% increase in the share price. It also showed a 7% rise in revenue for the first quarter ending in April, surpassing predictions of a decrease compared to the previous year, when the business benefited from a surge in post-pandemic shopping.

Inditex, which owns brands like Pull&Bear and Massimo Dutti, is investing in technology and logistics to keep up with competition from H&M, Shein, and Temu. This will enable them to deliver fashion trends at a faster pace. Due to investments in new stores and online experiences like livestream shopping, the company has outpaced rivals in recent quarters. Analysts estimated LSEG would report 8.1 billion euros in sales, but the company actually reported 8.15 billion euros ($8.87 billion) for the three months ending in April.

In Southern Europe, sales between May 1 and June 3 show increased demand after a cold and rainy start to spring, as reported by RBC analyst Richard Chamberlain. For the remainder of the second quarter, he projected a 20% rise in revenue. Madrid-based Trea Asset Management, led by portfolio manager Xavier Brun, said that Inditex is currently "competing against itself." This is because they are facing a challenging comparison this year after a successful performance last year. Compared to 2023's 10% growth, Brun anticipates sales to increase by 6% to 7% this year.

Inditex revised its earlier forecast of a 1.5% decline in sales this year to 2% due to unfavorable currency movements. According to average expert projections, first-quarter net profit increased 11% to 1.29 billion euros ($1.40 billion). Net profit increased by 54% in the first quarter of the previous year. Analysts expected a decrease in sales growth due to Shein's strong competition in major markets like the United States and weakening in Southern Europe. Through 2025, Inditex announced that it would invest 900 million euros a year to increase its logistics capacity, mostly in Europe.

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