Zara owner Inditex reports slowdown in sales growth

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Zara owner Inditex has reported a slowdown in sales growth that underscored concerns about weakening consumer spending in the fashion sector.

The Spanish group said on Wednesday that sales increased by 6.6 per cent to €8.8bn in the three months to the end of October, slightly less than analysts had expected and a drop from growth of well over 10 per cent in the past two years.

In addition to shaky consumer sentiment, analysts had expressed concern that Inditex sales would be hampered by warm weather in the key southern Europe region stopping people switching to winter purchases.

Inditex operates in more than 90 countries, but its biggest market is still Spain — where the company started as a family-run workshop in the 1960s — which last year held more than 1,200 Inditex stores and brought in 14 per cent of sales.

The company was more upbeat, however, about the most recent trends. In a trading update, it said store and online sales between 1 November and 11 December 2023 — a period including Black Friday — increased by 14 per cent from the same period in 2022.

Earnings remained stronger, with quarterly profit before tax up 17 per cent to just under €2bn, although it was also marginally short of market expectations.

The company, which also owns the brands Massimo Dutti and Pull & Bear, described sales for the first nine months of its financial year as “very satisfactory”.

The report comes a day after Zara drew criticism for an ad campaign featuring models alongside mannequins wrapped in white, which some viewers thought was insensitive for resembling images of dead bodies in Gaza.

The campaign, which Zara took down on Tuesday, triggered calls for a boycott and protests outside some of the chain’s stores.