Zara owner Inditex shrugs off consumer spending woes as profits jump
Zara owner Inditex has notched up a better-than-expected jump in profits over its first quarter as sales leaped higher despite consumer spending pressures taking their toll on the wider sector.
The fashion giant reported a 52% jump in pre-tax profits to £1.3 billion (€1.5 billion) in the three months to April 30, with net profits up by 54% to £999 million (€1.16 billion), which beat market forecasts.
Its profit haul follows a 13% surge in sales – up 15% with currency movements stripped out – as it cheered higher sales across all its regions globally.
The group said sales growth has remained in double digits, up 16% on a constant currency basis, since 1 May as it said “spring/summer collections continue to be very well received by our customers”.
It comes as rivals have been hit by rising costs and consumers reining in their spending.
Competitor H&M is set to report its latest update on 15 June after its last set of figures showed lacklustre trading in the three months to 28 February, with cold weather also impacting demand for spring ranges in many of its markets.
Costs had likewise held back H&M’s profits.
Inditex, which also owns brands including Pull&Bear and Massimo Dutti, said its profitability increased in the first quarter and is set to remain stable over 2023 as it offsets cost pressures.
It expects to increase its shop space by around 3% in 2023, but its latest update showed it had 5,801 stores as at 30 April, down from 6,423 a year ago.
