Recently, Inditex, the parent company of Zara, released its sales figures for the first quarter of 2025 and its early summer sales performance, both of which failed to meet expectations.
Reports indicate that concerns about inflation recovery and economic slowdown triggered by the U.S. government's capricious tariff measures have dampened shopping enthusiasm in the United States and other major consumer markets.
Inditex's revenue for the first quarter ending Apr 30 was 8.27 billion euros, lower than the analysts' forecast of 8.36 billion euros. During this quarter, net income grew by 0.8% to 1.3 billion euros. Inditex did not provide an explanation for the slowdown in sales growth.
According to reports, the disappointing results caused Inditex's stock price to drop by more than 4% intraday on Jun 11, marking the first time the market has seen the impact of global trade tensions on the fast-fashion industry ahead of the earnings season.
Gorka Garcia-Tapia, the head of investor relations at the company, said during an investor conference call that the tariff environment is difficult to predict, but Inditex is prepared to respond. "Our business spans the globe, so we have accumulated rich experience in dealing with changes in tariff regimes over the past few decades," he said. Inditex's diversified sales and procurement channels give it flexibility.
Reports also noted that Inditex's competitors have also experienced a sluggish spring. H&M's sales have continued to be weak, growing by only 1% in Mar, compared to a 4% growth in the same period last year. Its revenue from Dec 2024 to Feb 2025 grew by 2%, falling short of analysts' expectations.
William Woods, an analyst at Bernstein, said: "We need to take a step back and recognize that Inditex's growth has actually been quite good in this environment." Bernstein analysts also mentioned that the rainy weather in Spain, Inditex's home market, which accounts for 15% of its global sales, may have affected the company's performance. Spain experienced one of its wettest springs on record, with rainfall in Madrid three times the normal level.
In addition, Inditex stated that due to fluctuations in the foreign exchange market caused by trade risks, the impact of exchange rate fluctuations will be greater than previously expected. It is estimated that its 2025 sales will be negatively affected by 3%, compared to the 1% expected in Mar.
In the first quarter of 2025, Inditex opened new stores in 26 markets worldwide. As of the end of the quarter, Inditex operated a total of 5,562 stores.
