Zara owner Inditex sees shares fall as sales growth slows

Shares in clothing retail giant Inditex fell 5% to €46.7 after it posted first-quarter earnings and warned of a higher expected impact from currency swings this year. 

The Spanish owner of high street brands including Zara and Massimo Dutti reported earnings per share of €0.42 for the three months to 30 April, which compared to a consensus analyst forecast of €0.42.

Sales growth at constant currencies was 4.2% compared to the consensus forecast of 5.5%. Adjusted for the leap year, this would be 5.3%, which was still slower than the 7% figure the company previous gave in March. 

Total sales grew 1.5% to reach €8.3 billion, below the average forecast of €8.4 billion, with the United States, the group's second-largest market after Spain, was highlighted by management as a key contributor to overall sales growth.

Costs were "tightly controlled and show a favourable evolution", with operating expenses increasing 2.3%.

Trading in the first five weeks of the second quarter was up 6% at constant FX, compared to 12% this time last year, with guidance for the full year remaining largely unchanged, with the exception of a greater negative impact from FX, now expected to be 3%.

Analysts at Deutsche Bank said: "Inditex managed to deliver another set of figures at the headline level with very few surprises".

Garry White, investment commentator at Charles Stanley, said sales growth was slightly better than expected, "but it’s clear that the fashion retailer may face a more subdued pace of growth in 2025 compared to last year". 

“While the uptick in sales is encouraging, the company is evidently feeling the effects of reduced consumer spending and a slowing global economy. These results suggest that Inditex continues to navigate a challenging retail landscape effectively, leveraging its agile supply chain and trend-responsive collections. However, currency fluctuations and broader macroeconomic uncertainty remain potential obstacles."