Inditex Sales Accelerate Heading into Holiday โSeason, But Euro Strength Weighsโ on Forecasts
Madrid – Inditex, the world’s largest fashion retailer, is โคentering โtheโ crucial Christmas shopping period with accelerating sales,โข though analysts caution that a strengthening โฃeuro will likely โlimit reported growth. Shares have risen over 7% this โฃmonth, recovering from a downturn initiated in June following โthe release of weaker-than-expected first-quarter resultsโฃ – the company’s โคweakest in nearlyโ five years.
Despite โthe positive momentum, reports โindicate a slowdown in salesโ as the third quarter progressed. Barclaysโ projects a 7.2% sales increaseโ in local currency, acknowledging this reflects “weak fashion market data in โSeptember and October.” Deutsche Bank โคanticipates a more โmodest advance of 6%, forecasting aโค deceleration from โคa strong 9% start to the quarter to 4% in the second โhalf, citing deteriorating sector data in Europe, where two-thirds of Inditex’s sales โare generated.
JP Morgan predicts an 8% betterment in income at local prices, โฃreduced to 3.7% when factoring โขin currency effects, noting a weaker September and October in Europe. Renta โ4 analysts expectโ a negative โcurrencyโข impact of three points but remainโ optimistic, anticipating a continued recovery in sales towards normalized levels.
The third quarter is particularly vital for Inditex’sโ profitability,consistently delivering the highest net profit due โฃto full-price sales occurring outside of summer sales โand pre-Black Friday discounting periods.The Bloomberg consensus forecasts a net profit of โฃโฌ1.75 billion, a 4% increase year-over-year and 18% higher than the second quarter of this year. Barclays estimates โฌ1.746 billion (a 3.9% improvement), while JP Morgan offers a more conservative โestimate of โขโฌ1.709 billion (a 1.8% increase).
