PARIS — Sales remain steady at Zara parent company Inditex, though slowing from pandemic highs, with the holiday season up 9 percent so far, in the period from Nov. 1 to Dec. 9.
But that number remains slower than the 14 percent boost in sales at the start of the festive shopping season last year.
That news sent shares tumbling 6.5 percent in trading Wednesday, following the release.
“What we can tell about these recent periods that we’re very satisfied with the sales,” said chief executive officer Óscar García Maceiras in a call following the news. “You will know that the third quarter saw the strongest sales growth for the year in constant currency [but] was offset by a particularly negative currency impact.”
Maceiras cited major fluctuations in the Mexican peso and the Brazilian real as currencies that bit into the bottom line.
“These headwinds appear to be abating in the fourth quarter,” he added, indicating that a strong dollar should stabilize the real and boost sales in Brazil going into the rest of the year.
In the third quarter, profit after tax was 1.68 billion euros in the third quarter, up 6 percent year-over-year, but revenue came in at 9.4 billion, 2 percent below analysts’ expectations.
“Following a very strong post-pandemic period, its sales base is now larger, and its operating margin has reverted to above its long-term average. Inditex’s growth is broad based and global, and it has been showcasing the U.S. in recent years, where its market share is still low,” said RBC analyst Richard Chamberlain.
In the first nine months, sales were up 10.5 percent at constant currency to 27.4 billion euros, and up 7.1 percent on a reported basis, while gross profit was up 7.2 percent to 16.3 billion euros.
Zara benefits from its trendier brand perception, an idea it has reinforced with high-profile collaborations including a collection with model Kate Moss, which launched Nov. 30 just in time for the holiday season.
The company opened a stand-alone 7,500-square-foot Zara Man store in Madrid on Nov. 30 as it seeks to upscale its concepts. These openings are targeted toward what Maceiras called “key markets,” including Barcelona and Milan. There are now 90 stand-alone shops devoted to menswear around the world.
Strengthening its collaboration strategy, the company launched an exclusive collection with Casa Castellano shoes at the Madrid men’s store.
As Zara seeks to position itself as a main street, high fashion competitor to luxury brands, it also opened the store with exclusive, limited-edition and numbered items with special labeling including suiting, ties and outerwear with a focus on natural materials of cotton, cashmere and wool.
The Madrid men’s store is also home to the branded Zacaffè, a concept coffee shop that also hosts a separate entrance.
Zara has trailed the café concept in Dubai, opened in November 2023, as well as Paris and Lisbon.
Each café will be unique to the city in which it opens, and the Madrid location’s was designed by Ramdane Touhami in a Moorish revival style to reflect the city’s architecture, while the Lisbon location opened as a pasteleria emphasizing local custard pastries.
With the Zacaffé concept a success, the company will be opening new locations in Seoul, South Korea, and Osaka, Japan, in 2025.
By opening the Zara Man store, it cleared space in its Madrid flagship that will now convert to its Zara Apartment concept, opening next year with a curated collection of homewares. It’s part of the company’s upscaling of its presentation and store optimization with a cleaner interior design.
The store spruce ups include a larger footprint, and Maceiras highlighted that its recent redos of the stores Topanga, Calif., and Tampa, Fla., increased floor space from less than 10,000 square feet to more than 27,000 square feet “with a significant improvement of the customer experience.”
Inditex continues to adjust its retail mix across its seven brands. The company operates Bershka, Pull&Bear, Massimo Dutti, Oysho, Stradivarius and Zara Home in addition to its core brand Zara.
Inditex reduced its store count in the first nine months of the year, with 36 fewer Zara stores and 41 fewer Oysho stores, while it upped the number of its younger-skewing concept Pull&Bear stores by 23.
Questioned on the expansion of the youth concept, as well as its launch of a teen line Z3D within Zara in October, Maceiras demurred. “We see a lot of opportunities in all the different segments in which we operate,” he said.
The company has focused on tight inventory control and full-price sales as part of its omnichannel integration strategy, with inventory down 2.6 percent in the first nine months of the year.
The company’s previously announced investments of 1.8 billion euros in expanding its infrastructure will see the opening of a new logistics center in Zaragoza, Spain, expected to begin test runs in May 2025.
The company also made an investment in Epoch Biodesign, a start-up that uses artificial intelligence to design enzymes that allow the recycling of mixed plastics and textiles in its efforts to achieve textile-to-textile recycling of its predominantly polyester-based collections. Terms of the deal were not disclosed.
