PARIS – Sales remain steady at Zara parent company Inditex, though slowing from pandemic highs, with the holiday season up 9 percent so far, in the period from Nov. 1 to Dec. 9.
But that number remains slower than the 14 percent boost in sales at the start of the festive shopping season last year.
That news sent shares tumbling 5.6 percent in morning trading, following the release.
“What we can tell about these recent periods that we’re very satisfied with the sales,” said chief executive officer Óscar García Maceiras in a call following the news. “You will know that the third quarter saw that strongest sales growth for the year in constant currency [but] was offset by a particularly negative currency impact.”
Maceiras cited major fluctuations in the Mexican peso and the Brazilian real as currencies that bit into the bottom line.
“These headwinds appear to be abating in Q4,” he added, indicating that a strong dollar should boost sales in that market going into the rest of the year.
In the third quarter, profit after tax was 1.68 billion euros, up 6 percent year-over-year.
In the first nine months, sales were up 10.5 percent at constant currency to 27.4 billion euros, and up 7.1 percent on a reported basis.
The numbers show a steady through line for the year, as sales were up 10.2 percent at constant currency and 7.2 percent on a reported basis during the first six months of the year.
However they missed consensus, as analysts had estimated 8 percent growth for the nine months.
“Following a very strong post-pandemic period, its sales base is now larger and its operating margin has reverted to above its long-term average. Inditex’s growth is broad based and global, and it has been showcasing the U.S. in recent years, where its market share is still low,” said RBC analyst Richard Chamberlain.
Inditex remains ahead of its main high street rival H&M, which has seen revenues flat in recent quarters. The Spanish giant draws much on its strength from its Zara flagship brand.
Zara benefits from its trendier brand perception, an idea it has reinforced with high profile collaborations including a collection with model Kate Moss, which launched Nov. 30 just in time for the holiday season.
It’s also launched other high fashion collaborations with the likes of stylist Harry Lambert and Stefano Pilati, former designer of Saint Laurent, to up its fashion credentials.
The company has focused on tight inventory control and full-price sales as part of its omnichannel integration strategy, with inventory down 2.6 percent in the first nine months of the year.
Inditex adjusted its retail mix across its seven brands. Inditex operates Bershka, Pull&Bear, Massimo Dutti, Oysho, Stradivarius and Zara Home in addition to its core brand Zara.
The company reduced its store count in the first nine months of the year, with 36 fewer Zara stores and 41 fewer Oysho stores. It upped the number of its younger-skewing concept Pull&Bear stores by 23.
The company also made an investment in Epoch Biodesign, a startup that uses artificial intelligence to design enzymes that allow the recycling of mixed plastics and textiles in its efforts to achieve textile-to-textile recycling of its predominantly polyester-based collections. Terms of the deal were not disclosed.
