Inditex, the Madrid-listed owner of Zara, posted a rare miss on quarterly sales and profit on Wednesday, but the world’s biggest listed fast-fashion retailer said the holiday shopping season had got off to a good start.

Shares in Inditex, which have risen about 30 per cent this year, fell 6 per cent in early trading as investors digested results hit by currency fluctuations and severe floods in Spain, Inditex’s biggest market.

Third-quarter sales of €9.36 billion came in below the €9.51 billion expected by analysts. An 8.5 per cent rise in nine-month net profit to €4.44 billion also lagged the €4.52 billion expected by analysts.

Severe floods at the end of October in Spain had a “very limited” impact on the company’s performance, capital markets director Marcos Lopez told analysts on a call.

A strong dollar and weak euro also hurt the result, analysts said, as Inditex makes most of its sales in euros.

“Despite the quarterly setback, affected by the weather and the exchange rate, I believe the company continues on its growth trajectory,” said Xavier Brun, portfolio manager at Madrid-based Trea Asset Management, which holds Inditex shares.

Zara has been investing in larger stores, logistics centres and marketing, launching a collection with supermodel Kate Moss, as it tries to maintain its edge over fast-fashion rivals like H&M and Shein, which sell at lower prices.

Inditex reported a good start to the holiday season, though, with revenues up 9 per cent in currency-adjusted terms in the six weeks to December 9th, which includes key Black Friday sales. Still, that was slower than the 14 per cent sales growth reported a year ago.

“We had a strong start to the last quarter against a demanding comparable in the same period of 2023,” Lopez told Reuters. – Reuters

(c) Copyright Thomson Reuters 2024