Inditex posts higher profit as sales rise

Inditex reported a 7% increase in pre-tax profit to 3.85 billion euros (£3.3 billion) for the six months ending 31 July. Total revenue rose 7.6% to 19.76 billion euros (£16.96 billion), reflecting a 9.2% increase on a constant currency basis. Chief executive Oscar Garcia Maceiras noted that the group achieved these results in a highly complex global environment, as hot weather and the Iran war weighed on European consumer confidence.

The company reported early momentum for its autumn and winter collections. Sales between 1 August and 7 September increased 9% on a constant currency basis despite ongoing heatwaves across Europe and the UK. Cheaper banners such as Bershka and Stradivarius achieved double-digit sales growth during the first half.

Despite higher earnings, Inditex shares fell 4% in Madrid. Investors reacted to a profit margin of 58.7%, which came in below market expectations, alongside steady rather than accelerating growth. Angeline Ong, senior technical analyst at IG, noted that the stock traded at roughly 24 times forward earnings ahead of the print, leaving little room for results that did not outperform.

The retailer ended the half with 5,444 stores worldwide, down from 5,528 stores a year earlier. Its budget chain Lefties bucked the store closure trend by expanding its network to 223 locations from 210. Lefties is scheduled to open its first UK branches during the second half in Liverpool One, Lakeside in West Thurrock, and Metrocentre in Gateshead.