Inditex profits show fashion rivals the way

Sales at Inditex have rebounded from a slow start to the summer, propelling the world’s largest listed fashion retailer to a record profit for the first half of the year.The Spanish owner of Zara reported sales of £18.1 billion in the six months to the end of July, up by 7.2 per cent from the same period in 2023. Pre-tax profits rose by more than 10.6 per cent to £3.6 billion, despite a slackening in the pace of price increases.
Inditex said its autumn-winter collections had been “very well-received” by shoppers, with sales ahead by 11 per cent between August 1 and September 8.
The “solid” performance comes as some rivals struggle with rising costs and a continued go-slow in consumer spending. Unseasonable weather across much of Europe kept shoppers away from stores in June, leaving many retailers with unsold stock.
H&M, a Swedish competitor, cited this as the reason for its poorer sales performance, while wet weather in Britain hit summer sales at Primark. In Spain, which accounts for 15 per cent of Inditex’s sales, June rainfall was 50 per cent above average. Xavier Brun, of Trea Asset Management, a Spanish finance firm, said that the group’s tight control over its supply chain had given it “greater capacity to react to this seasonality”.
Inditex is taking on the challenge from online fast-fashion brands such as Shein and Temu by opening new warehouses and investing in logistics to get new lines into stores more quickly. It is also deepening its digital marketing with the launch of Zara Streaming, a video platform for live shopping broadcasts, in markets including Spain, Germany and Britain. Womenswear prices were 6 per cent down year-on-year in the second quarter.
Inditex reported strong growth in Europe, particularly in Spain. Its performance was weaker in the United States, a key area for the group as it plans to expand.
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Sales at Zara, its biggest brand, rose by 5.4 per cent to £13.03 billion during the six-month period. Bershka, a youth-focused brand, reported revenues of £1.38 billion, an increase of 16.7 per cent.
Inditex was founded in 1963 by Amancio Ortega, 88, now one of the world’s richest men, as a family business. Based in Galicia, northwest Spain, it has more than 5,600 stores and is also the parent company of Massimo Dutti, Oysho and Pull&Bear.
Inditex will launch Zara’s pre-owned platform in America by the end of October. The donation and resale site is available in 16 countries at present. As part of the Spanish fashion group’s efforts to increase its logistics capabilities, it is investing €1.8 billion from 2024-25. One of the new logistics centres will be located in Zaragoza, Spain, and is expected to open in May or June 2025.
Óscar García Maceiras, 48, the chief executive of Inditex, said the group’s model “continues to generate opportunities for profitable growth across all concepts, regions and channels”.
Nicolas Champ, an analyst at Barclays, said the retailer was moving back to “normal” trading, after softer sales earlier in the summer. “Even though sales geographic breakdown suggests a weaker demand in Asia in the first half, this is more than offset by resilient performance in Europe,” he said.
Shares in Inditex, which have risen by 34 per cent in the past year, added another €2.10, or 4.5 per cent, to €48.38 in Madrid.