Growth slowed for fashion giant Inditex in Q1 with the quarter to the end of April seeing just a 1.5% rise in sales to €8.274 billion. And net profit edged up just a marginal 0.8% to €1.305 billion.
The company released it latest results on Wednesday and found itself in an unusual position with the Zara and Massimo Dutti owner much more used to easily beating the wider market on the growth front.
Admittedly, at constant exchange rates, sales were up a healthier 4.2% and given that the same quarter a year ago had an extra day (due to the leap year), the rise would have been 5.3%. But given that sales rose 7.1% this time last year (and 10.6% currency-neutral), this latest quarter shows a clear slowdown.
Yet the company said its SS25 collections have been well received by its customers and its performance appears to have improved since the quarter end with the company stressing that store and online sales in constant currency between 1 May and 9 June increased 6% versus the same period in 2024, which is notably better than the Q1 number. However, currency exchange effects are expected to dampen sales growth for the rest of the year.
The company called the first quarter “solid” and said EBITDA rose 1% to €2.393 billion, although pre-tax profit was flat at €1.671 billion.
Investing for growth
Aside from one slow quarter, Inditex continues to invest heavily in growth, including its new distribution centre in Zaragoza that should start operations this summer.
It will invest around €1.8 billion this year alone and in Q1 opened stores in 26 markets, although rationalisation of its store estate means it has 5,562 locations in total, down from 5,698 stores this time last year. Its Q1 openings and revamps included Athens, Boston, Seoul, Turin, Los Angeles, London, and Paris.
The 2025/26 financial year as a whole should see a 5% total space expansion with a focus on optimising its spaces to boost productivity.
Other initiatives for this year include new technology in its stores to provide “a significant improvement in customer experience, facilitating interaction with our products, improving the purchasing process”. This “will be the basis for us to continue deepening the digitalisation of stores and their integration with online platforms in the coming years”.
The new system is now fully operational in Zara and, in the process of its implementation in the rest of the concepts, is being rolled out in Bershka and Pull&Bear.
Meanwhile, Zara.com has started offering ‘Travel Mode’ to shoppers in the UK, Italy and Japan and will soon be available in Spain, France and Turkey. Via this functionality, travelling clients can receive their online purchases wherever they’re staying and access travel tips in cities like London, Rome and Tokyo.
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