Inditex's Cloudy Forecast Amid Economic Gloom
Inditex's first-quarter sales results missed expectations, fueling worries about its capability to sustain growth amid economic headwinds, including inflation and tariffs. The company's revenue increased by 6% compared to the anticipated 7.3%, linked to inclement weather in Spain and currency volatility.
Inditex, the owner of Zara, has reported first-quarter sales that fell short of expectations, causing concern over the retailer's growth potential in a challenging economic climate. Persistent inflation and an economic slowdown, exacerbated by tariffs, have subdued consumer spending in the U.S. and other markets.
The company observed a sluggish start to its summer sales, with currency-adjusted revenue rising by only 6% from May 1 to June 9, below the 7.3% anticipated by analysts, and a decline from the 12% growth recorded in the same period last year. The first-quarter revenues amounted to 8.27 billion euros, missing analysts' predictions of 8.36 billion euros in an LSEG poll.
While Inditex's net income experienced a slight rise of 0.8% in the quarter, reaching 1.23 billion euros, the company remained tight-lipped about the slower sales growth. Factors contributing to the downturn included rainy weather in Spain, impacting 15% of Inditex's global sales, and increased currency fluctuation risks, expecting a 3% adverse impact on its 2025 sales.
(With inputs from agencies.)
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