PARIS — Zara parent company Inditex is starting 2025 on its back foot, with lower-than-expected sales in the three months to April 30.
Sales rose 4.2 percent at constant currency, a notable slowdown from the company’s long-running streak of double-digit growth. The figure also fell short of analysts’ expectations for 5.6 percent growth year-over-year.
“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. We expect a more moderate rate of sales and EPS growth this year and as such in our view valuation looks fairly full compared to some other retailers and also the luxury sector,” RBC analyst Richard Chamberlain said in a trading note.
Despite macroeconomic pressures, Inditex signaled a more encouraging trend for the second quarter, with sales up 6 percent year-over-year at constant currency from May 1 to June 9.
The parent company of Pull&Bear, Massimo Dutti, Bershka, Stradivarius and Oysho saw tempered numbers in other key categories, with gross profit up 1.5 percent to 5 billion euros, while operating expenses were up 2.3 percent.
Earnings before interest, taxes, depreciation, and amortization (EBITDA) ticked up 1 percent to 2.4 billion euros, while operating profit (EBIT) increased by 0.3 percent to 1.6 billion euros. Net income for the quarter rose 0.8 percent to 1.3 billion euros.
The company is continuing to revamp its retail network. More than 130 smaller or underperforming stores across all brands are being closed, while net retail space is expected to grow by 5 percent. The focus is on larger, more modern store formats, including expansions at The Grove in Los Angeles and Noon Square in Seoul, South Korea.
Store upgrades were also carried out across other Inditex concepts, including Massimo Dutti and Pull&Bear in London, and Oysho in Paris. New Zara stores have recently opened in Athens, Greece, and Cambridge, Massachusetts.
Improving its services, Zara launched Travel Mode for customers in the UK, Italy, and Japan, a service allowing delivery of online purchases to wherever a customer is staying. The rollout will soon extend to France, Spain, and Turkey.
Inditex is also advancing its logistics infrastructure to support global growth. A new distribution center in Zaragoza, Spain, is scheduled to open this summer. The upgraded logistics system is now fully operational at Zara and is being implemented across other brands, including Bershka and Pull&Bear.
Inditex will also see a board change at its upcoming annual meeting on July 15, with José Arnau stepping down and Roberto Cibeira, CEO of Pontegadea, set to take his place.