MADRID (Reuters) -Zara owner Inditex (BME:ITX) reported a rebound in recent sales of its first autumn-winter collections on Wednesday, offsetting a slowdown in sales in the first half of the year that was in line with analysts’ expectations.
The fashion giant said its sales between Aug. 1 and Sept. 8 saw an 11% boost in constant currency compared with a year ago, which countervailed the slowdown in earlier months.
The world’s biggest listed fashion retailer reported a 10% rise in first-half profit as sales increased 7.2%, at a slower pace than last year but in line with analysts’ forecasts of tougher times for fashion retailers in Europe, partly due to wetter-than-expected weather in early summer.
Despite June’s headwinds, Inditex posted net incomes of 2.8 billion euros ($3.09 billion) and sales of 18.1 billion euros in its first half ending in July, while analysts polled by LSEG expected a profit of 2.77 billion euros with 18 billion euros in sales.
Analysts from HSBC, RBC, JPMorgan and Bestinver expected Zara sales to rebound into the double digits in the first five weeks of its third quarter beginning in August, after a wet and cold June in its biggest market, Spain, dashed expectations of a bumper second quarter, as Zara had anticipated.
The fashion company has fought to stay ahead of rivals such as H&M (ST:HMb) and growing Chinese rival Shein by investing in logistics and technology to deliver fashion trends faster and making an effort to minimise price increases on everyday items.
H&M said June sales were likely to fall 6% in local currencies versus a year earlier, partly due to worse weather in many markets, while the wet weather in Britain also hit summer sales at Primark.
“I don’t look at stocks with a short-term horizon and a three-to-five year view. Inditex is the best fashion retailer in the whole brick-and-mortar space, as well as online,” said fund manager Vera Diehl of Union Investment, who considers Inditex’s gap with H&M and Shein has widened.
“The company takes long-term strategic decisions,” Diehl added.
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