PARIS — Zara parent Inditex continued its sales growth run, with revenues up 9.1 percent at constant currency to 11 billion euros in the three months ending July 30, even as the Spanish fast-fashion behemoth faced difficult consumer and macroeconomic headwinds.
It marked an acceleration from the first quarter of the year, when sales grew 5.8 percent, and showed continued momentum going into the fall season with sales in constant currency up 9 percent year-over-year in the five weeks from Aug. 1 to Sept. 7.
However, the stock price eased 4.2 percent at midday as investors were less impressed with the headline growth number versus profit performance, operating costs and the company’s continued expansion spend which outpaced sales growth.
“The 9 percent increase in [the second quarter], which continued through August, wasn’t sufficient to absorb the extra depreciation from the completed 1.8 billion-euro logistics investment, making margin contraction look inevitable,” said Bloomberg Intelligence senior retail analyst Charles Allen.
He indicated that the retailer would need to continue to accelerate its sales to 11 percent in the second half of the year to hit consensus, “which appears difficult to achieve as depreciation and amortization and other operating expenses are set to rise faster.”
