Zara owner Inditex’s sales accelerated in November, highlighting its resilience in the face of weakening consumer sentiment that is hitting most fashion retailers.
Revenue at the world’s largest listed clothing retailer, which operates some 23 stores in Ireland, including nine Zara outlets, rose 10.6 per cent in the four weeks to December 1st, the Spanish company said on Wednesday.
The growth in the early weeks of the company’s fiscal fourth quarter came after sales rose 8.4 per cent at constant currencies in the third quarter.
While Inditex did not give a breakdown by region on Wednesday, Spain’s strong economy could be providing a boost to the retailer, which makes around 20 per cent of its revenue in its home country, said Bernstein analyst William Woods.
“Spain has just been phenomenal; the Spanish economy is working, and people are buying more clothes,” he said.
Inditex’s strong third-quarter growth was despite unusually warm October weather in many parts of Europe, likely weighing on sales of higher-priced autumn and winter items like jackets and coats.
The gain offers some relief following a lacklustre spell, and may ease concerns that the Spanish retailer was losing steam.
Inditex’s long-standing formula of lean stock levels, trend-driven designs and an agile supply chain has long given it an edge over competitors like Sweden’s Hennes & Mauritz.
Still, the company’s expansion has cooled markedly from early post-pandemic highs, weighed down by trade frictions and softer consumer demand.
The depreciation of the dollar and other currencies is also eroding Inditex’s reported sales by diminishing the euro value of revenue generated abroad. Inditex expects foreign exchange swings to wipe out about 4 per cent of this year’s revenue – an impact equivalent to losing several weeks of growth.
On a reported basis, sales grew 4.9% to €9.8 billion. – Bloomberg, Reuters
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