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Shares in Zara owner Inditex fell 7 per cent on Wednesday after the world’s biggest fashion retailer said sales growth had started to slow.
Inditex alarmed investors after results showed sales rose 4 per cent in the past five weeks, significantly below its quarterly growth rates of 7 per cent or more in the past year.
It was the company’s weakest trading update since 2016, excluding the pandemic era, according to UBS analysts.
Uncertainty about the impact of US President Donald Trump’s tariff threats also weighed on the stock — the US is Inditex’s second biggest market but it does not produce any of its clothes there.
In the fourth quarter overall, including the vital Christmas season, sales grew 8.4 per cent to €11.2bn while net profit rose nearly 14 per cent to €1.4bn.
Inditex, which also owns brands including Massimo Dutti and Stradivarius but gets more than two-thirds of its sales from Zara, grew faster than many rivals after the Covid-19 pandemic. Some analysts said its latest results indicated that its performance was “normalising”.
Sales figures for the three months to the end of January pointed to relative weakness in the Americas region including the US as well as in Asia. Inditex did better in Europe including Spain, its biggest market.
Deutsche Bank analysts said the 4 per cent sales growth in the past five weeks was “below the bottom end” of the range they had forecast. Before the results, Deutsche said its analysis of internet search and cargo data suggested Inditex growth was slowing and its “brand heat” was fading.
Inditex’s chief executive Óscar García Maceiras sought to downplay the figure’s significance, saying the five-week period from February 1 to March 10 “represents a small part of the year at the beginning of the season” for spring and summer fashions.
In a bid to head off concern, the company took the unusual step of publishing sales figures just for the past week, which showed a 7 per cent rise. García Maceiras said: “We are confident in our execution for the year ahead.”
Shares were down 7.5 per cent at €45.01 by mid-morning, reducing Inditex’s market capitalisation to just under €139bn.
Reflecting Inditex’s post-pandemic strength, its share price has more than doubled since mid-2022.
On Trump’s trade policy, García Maceiras said: “The current environment is difficult to predict in terms of tariffs . . . However, we consider that we are in a very good position due to our levels of geographical diversification in terms of sourcing and sales. As we operate in many markets, we have experience dealing with different tariff regimes and we also have a flexible business model.”
