The Q1 performance of Zara's parent company falls short of expectations

Recently, Zara's parent company-Inditex, released its sales figures for the first quarter of 2025 and its early summer sales performance, both of which failed to meet expectations. Reports indicate that concerns about inflation recovery and economic slowdown triggered by the U.S. government's capricious tariff measures have dampened shopping enthusiasm in the United States and other major consumer markets.

Inditex's revenue for the first quarter ended April 30 was 8.27 billion euros, lower than the analysts' forecast of 8.36 billion euros. The net income for the quarter increased by 0.8% to 1.3 billion euros. Inditex did not explain the slowdown in sales growth.

According to reports, the performance shortfall caused Inditex's stock price to drop by more than 4% during intraday trading on June 11, marking the first time the market has seen the impact of global trade tensions on the fast-fashion industry ahead of the earnings season.

Gorka Garcia-Tapia, the head of investor relations at the company, said during an investor conference call that the tariff environment is difficult to predict, but Inditex is prepared to respond. "Our business is global, so we have accumulated rich experience in dealing with changes in tariff regimes over the past few decades," he said. Inditex's diversified sales and procurement have given it flexibility.

Reports also noted that Inditex's competitors have also experienced a sluggish spring. H&M's sales have continued to be sluggish, growing by only 1% in March, compared with a 4% increase in the same period last year. Revenue from December 2024 to February 2025 increased by 2%, falling short of analysts' expectations.

William Woods, an analyst at Bernstein, said: "We need to take a step back. In this environment, Inditex's growth has actually been quite good." Bernstein analysts also mentioned that the rainy weather in Spain, Inditex's home market, which accounts for 15% of its global sales, may have affected the company's performance. Spain experienced one of its wettest springs on record, with Madrid receiving three times the normal rainfall.

In addition, Inditex stated that due to fluctuations in the foreign exchange market caused by trade risks, the impact of exchange rate fluctuations will be greater than previously expected. It is estimated that its 2025 sales will be negatively affected by 3%, compared with the 1% expected in March.

In the first quarter of 2025, Inditex opened new stores in 26 markets worldwide. As of the end of the quarter, Inditex operated a total of 5,562 stores.