Zara owner Inditex missed expectations for first-quarter sales and early summer trading on Wednesday, as tariff fallout complicated the fast-fashion retailer’s efforts to maintain strong growth.
Concerns about resurgent inflation and an economic slowdown triggered by US President Donald Trump’s erratic tariff rollout have already dampened shopping enthusiasm in the United States and other major consumer markets.
Inditex’s competitors have also experienced a sluggish spring. The gorup has 23 outlets in Ireland, including Zara and Pull & Bear, and employs over 700 people.
The company reported a slower start to its summer sales, with currency-adjusted revenue growth of 6 per cent from May 1st to June 9th, compared to analysts’ expectations of 7.3 per cent, and down from 12 per cent growth in the same period a year ago.
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Revenues for its first quarter ending April 30th were €8.27 billion, missing analysts’ average estimate of €8.36 billion, according to an LSEG poll.
Net income increased 0.8 per cent in the quarter, to €1.3 billion.
Inditex shares were down 4 per cent in early trading, making it the second-worst performer on the Stoxx 600 index.
Inditex did not provide a reason for the weaker sales growth. In a statement, it called its performance “solid”, having labelled it “very robust” at its previous results announcement in March, when annual sales were up 10.5 per cent.
“Overall weaker sales growth is a combination of demand volatility in Q1, but we need to take a step back and look at mid single-digit growth as actually being quite good in this environment,” said Bernstein analyst William Woods.
Inditex rival H & M’s sales have also struggled, growing by just 1 per cent in March compared to 4 per cent in the same period a year earlier. Its December-February revenue grew by 2 per cent, below analyst forecasts.
Rainy weather in Spain, which accounts for 15 per cent of Inditex’s global sales, has also likely hurt the company’s performance, according to Bernstein analysts.
Spain experienced one of its wettest ever springs, with Madrid recording three times its usual levels of rainfall for the season.
With volatility in foreign exchange markets driven by trade risks, Inditex said currency fluctuations will have a bigger impact than previously expected, predicting a 3 per cent negative effect on its 2025 sales, compared with the 1 per cent it flagged in March. – Reuters
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