Warm autumn slows sales at Zara owner Inditex

Inditex, the world’s biggest clothes retailer and owner of Zara, has reported a slowdown in sales growth in its third quarter as Europe’s warm autumn kept shoppers away, though it pointed to a brighter end of the year.

Warm autumn slows sales at Zara owner Inditex

Robert Hetz

Inditex, the world’s biggest clothes retailer and owner of Zara, has reported a slowdown in sales growth in its third quarter as Europe’s warm autumn kept shoppers away, though it pointed to a brighter end of the year.

Fashion retailers such as Next and John Lewis have already reported a hit from warmer-than-usual weather as shoppers ignored new winter ranges.

Inditex’s biggest rival, Sweden’s H&M, will report fourth-quarter sales tomorrow.

Inditex said sales between August and October rose 6% year-on-year to €6.3bn, in line with analysts’ forecasts, while net profit rose 2.7% to €975m. The sales growth was down from 9.2% in the previous quarter and 11.6% a year ago.

“The top line is showing a big deceleration versus previous quarters”, analysts from Kepler Cheuvreux wrote in a note.

Most of the lower growth is already priced in to the shares, they said. Inditex shares have fallen about 2% this year, against a decline of more than 20% for H&M.

However, colder weather arrived in November and Inditex said sales at its more than 7,500 stores and online increased 13% at constant exchange rates between the start of November and December 11, as shoppers snapped up items such as oversized jumpers and puffer parkas from new collections.

Analysts said the lower sales growth and a strong euro helped to push the company’s gross sales margin for the quarter to 58.4%, down 33 basis points from a year earlier.

Inditex’s profits are sensitive to fluctuations in the euro because it makes most of its clothes in the eurozone to respond quickly to fashion trends but generates more than half of its sales in countries outside the currency bloc.

The business model has kept Inditex ahead of rivals such as H&M.

By keeping its manufacturing bases close to its distribution centre in the northern Spanish region of Galicia, it can shift new designs from catwalk to shop window within weeks.

The Spanish retailer’s other brands include teen label Bershka and underwear chain Oysho.

Reuters

more courts articles

Man appears in court charged with false imprisonment of woman in van Man appears in court charged with false imprisonment of woman in van
Man in court over alleged false imprisonment of woman Man in court over alleged false imprisonment of woman
Coronation Street actor William Roache (91) given three months to settle tax debt Coronation Street actor William Roache (91) given three months to settle tax debt

More in this section

Nottingham City Centre Stock Irish staff at the Body Shop wait for wages as retailer shuts stores in the Republic
Ryanair comments on Norwegian Ryanair boss O'Leary's spat with Transport Minister over Dublin Airport escalates
Lord Rothschild death Tony Blair leads tributes on death of financier Rothschild at age 87
IE logo
Devices


UNLIMITED ACCESS TO THE IRISH EXAMINER FOR TEAMS AND ORGANISATIONS
FIND OUT MORE

The Business Hub
Newsletter

News and analysis on business, money and jobs from Munster and beyond by our expert team of business writers.

Sign up
ie logo
Puzzles Logo

Play digital puzzles like crosswords, sudoku and a variety of word games including the popular Word Wheel

Lunchtime News
Newsletter

Keep up with the stories of the day with our lunchtime news wrap.

Sign up
Cookie Policy Privacy Policy Brand Safety FAQ Help Contact Us Terms and Conditions

© Examiner Echo Group Limited