"Inditex Thrives: Spring Sales Surge Spurs Zara Owner's Growth"

Boston Brand Media brings you the latest - "Inditex, the parent company of fashion giant Zara, experiences significant growth driven by a surge in spring sales. The increase in sales prompts a thriving period for the company, highlighting its robust performance and market momentum. This growth reflects positively on Inditex's overall trajectory and underscores the influence of seasonal trends on its business strategy and profitability."

Summary:

• Sales jump 12% from May 1 to June 3
• Q1 sales, net profit in line with expectations
• Shares up almost 5%

MADRID, June 5 (Reuters) - Inditex, the parent company of Zara, revealed a rise in recent sales from its Spring/Summer collections, resulting in a surge in its shares on Wednesday. This announcement came as the leading global fashion retailer released quarterly results that met predictions. The Spanish firm disclosed a 12% increase in sales between May 1 and June 3 compared to the previous year, propelling its shares nearly 5% higher to a month-long peak during early trading. Meanwhile, H&M, its competitor, experienced a 1.8% rise in shares.

Inditex additionally disclosed a 7% increase in sales for its first quarter ending in April, a predictable deceleration from the previous year's surge following the pandemic-induced shopping frenzy. The corporation, which encompasses brands such as Pull&Bear and Massimo Dutti, confronts fierce competition from rivals like H&M, Shein, and Temu. It counters this competition by swiftly pursuing and delivering fashion trends, facilitated by investments in logistics and technology.

Boston Brand Media also found that Inditex has surpassed its competitors in recent quarters, reaping the rewards of its investments in innovative store concepts and online experiences. One such initiative is livestream shopping, allowing consumers to view fashion presentations online and make purchases seamlessly. CEO Oscar Garcia Maceiras informed analysts of plans to extend livestream services via its platforms to markets like the United States and Britain, following positive outcomes observed in China.

"We anticipate the launch of this new service in the upcoming weeks," he remarked, indicating that the company plans to increase store selling space by approximately 5% annually until 2026, following enhancements or openings in 28 markets recently. Inditex currently operates 5,698 stores. Additionally, the company introduced its upscale Massimo Dutti brand on JD.com in China during the quarter. Despite analysts' average forecast of 8.1 billion euros in an LSEG poll, Inditex reported sales of 8.15 billion euros ($8.87 billion) for the three months ending in April.

RBC analyst Richard Chamberlain noted that sales between May 1 and June 3 indicated pent-up demand following a chilly and rainy start to spring in southern Europe. He projected a 20% sales increase for the rest of the second quarter. Xavier Brun, portfolio manager at Trea Asset Management, observed that Inditex is essentially competing against its own exceptional performance last year, making comparisons challenging. Inditex benefits from selling products at higher prices outside Spain. 

For instance, in the United States, its second-largest market, prices for new handbags surged 54% year-on-year in the first quarter, while women's blazers rose by 19%, as reported by global retail analytics firm EDITED. Some investors anticipate Inditex's valuation to rise, with its shares trading at nearly 23 times expected earnings for the next 12 months, compared to 19 times for H&M, according to LSEG data. Bestinver Securities analyst Patricia Cifuentes highlighted potential upside for Inditex's 2024 sales and anticipated a stock re-rating. 

Inditex expects adverse currency movements to reduce sales by 2% this year, up from previous guidance of a 1.5% impact. First-quarter net profit increased by 11% to 1.29 billion euros ($1.40 billion), aligning with analysts' average forecasts. This growth is a slowdown from the 54% surge seen in the first quarter of the previous year. Analysts had predicted a sales growth deceleration in early spring, partly due to weaknesses in southern Europe and strong competition in key markets like the United States from Shein. 

Inditex plans to invest 900 million euros annually through 2025 to expand logistics capacity, primarily in Europe. The company reported a 3% decrease in inventories at the end of April compared to a year earlier, indicating efficiency in delivering fashion trends.

($1 = 0.9192 euros)

For questions or comments write to writers@bostonbrandmedia.com

Source: Reuters‍