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Inditex inches higher as Zara owner unveils strong fourth-quarter start

Published 12/13/2023, 07:58 PM
Updated 12/13/2023, 07:58 PM
© Reuters -- Madrid-listed shares in Inditex (BME:ITX) rose on Wednesday after the fast-fashion giant said that it has seen a strong start to fourth-quarter trading and boosted its full-year margin guidance despite foreign exchange headwinds.

The Zara owner, which has been revamping its locations in a bid to boost sales, said that its autumn and winter collections have been well received by shoppers, with sales between Nov. 1 and Dec. 11 increasing by 14% at constant currency versus the same timeframe in 2022. Inditex added that it has seen "a very satisfactory evolution" of online demand in particular.

Although the company expects to be hit by a projected 4% currency impact on its fiscal 2023 sales, it now expects to post a gross annual margin of around 75 basis points higher than in the prior year. It had previously said gross margins would be stable during the period.

"We do not model for a sizeable increase in margins in the years ahead," analysts at Jefferies said in a note. "But we do reflect on the remarkable regularity with which the group is delivering market share gains."

The firm behind brands like Massimo Dutti and Bershka posted sales growth of roughly 7% to just under €8.8 billion ($1 = €0.9273) in the three months ended on Oct. 31, slowing from an uptick of 16% in the second quarter, in a sign of a pullback in consumer spending during a time of high inflation and elevated interest rates. Quarterly profit before tax, meanwhile, was just under €2B.

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