Zara Owner Cautions On Sales Given Uncertain Environment
March 12, 2025
Caution over the year ahead rattled investors in Zara owner Inditex this morning, as the Spanish apparel giantpointed to a slowdown in demand at the start of the year, despite posting a year-on-year rise in fourth-quarter sales that met expectations.
It left analysts wondering whether the cava glass is half full or half empty, as the multi-brand retailer reported revenues of $12.2 billion in the three-month period, matching the forecast by analysts at LSEG and up from the $11.25 billion recorded in the same period of last year.
Fourth-quarter net income came in at $1.55 billion, also in line with analyst expectations, while full-year sales rose 10.5% in currency-neutral terms to total $42 billion in 2024, just ahead of anticipation.
So far, so impressive, but it was the fact that the company pointed to a slightly slower pace of growth in first-quarter sales this year – revenues were up 4% in currency neutral terms from Feb. 1 to March 10, versus 11% growth the year prior – that caught the eye and saw its share price drop nearly 8% in early trading.
While Zara has successfully held off competition from new players and online upstarts globally, the U.S. is its second largest market and the tit-for-tat tariff trade wars emerging are clearly front and center of its thoughts right now.
Asked about the slowdown during an earnings call after the latest announcement, CEO Óscar García Maceiras said the company remained “confident in our execution for the year ahead,” but he cited uncertainty around U.S. tariffs, which made the environment going forwards “difficult to predict.”
Inditex Expands Brands And Services
Last year Inditex, which first landed in the U.S. with a Zara store in New York in 1989, pledged to new store openings in North America, store renovations and expansions, plus the launch of streaming sales and live shopping. Currently Inditex has around 100 Zara stores in the U.S. and operates in 26 states.
Another Inditex brand, Massimo Dutti, returned in the Fall last year after it had previously withdrawn after a failed first venture 12 years ago with a New York flagship, with its first outlet opening in mid-October, in Aventura Mall, Miami.
“We will continue to focus on improving our presence in the United States, where we have 100 stores, all of them Zara. Besides this new Massimo Dutti store, we will be executing very important, very exciting projects in order to enhance our customers’ experience here,” Maceiras said last year of the company’s plans.
The group also launched its second-hand clothing platform, Zara Pre Owned, at the end of October and completed the U.S. launch of its streaming sales platform, which it has already successfully tested in China.
“We are very excited about the possibility of expanding that kind of interaction. Our expectation is that it will have a great impact for our customers,” said Maceiras. Streaming sales have also been or are to be launched in Canada, the U.K., Spain, France, Italy and Germany.
Galicia-northwest Spain headquartered Inditex owns the brands Zara, Massimo Dutti, Pull&Bear, Bershka, Stradivarius, Oysho and Zara Home and has become a global powerhouse in fast fashion and apparel staples.
Search
RECENT PRESS RELEASES
Related Post
