Zara owner Inditex reports 9% sales growth at start of first quarter (updated)
11/03/2026 07:03
Adds investor comments in paragraphs 4 and 11, CEO declined to detail Middle East impacts in 7, details on Lefties in 12 Sales up 9% in February, meeting expectations Inditex improves profitability with store and logistics upgrades Operating margin hits 20.1% in 2025 Most stores in Middle East open, CEO says, after conflict caused temporary closures By Helen Reid PARIS, March 11 (Reuters) - Zara owner Inditex reported higher 2025 profit margins and a 9% increase in currency-adjusted sales at the start of its first quarter, demonstrating the fast fashion retailer's resilience despite fragile demand in key markets. The result is likely to reassure investors that the fashion giant with a $190-billion market capitalisation can sustain solid growth despite European and U.S. consumers facing further pressure from a surge in oil and gas prices triggered by the conflict in the Middle East. Inditex ITX.MC shares jumped 5% in early trading, before paring gains to trade 2% higher at 53.6 euros by 1100 GMT. "It was a pretty strong set of numbers - the cost control, with gross margin and EBIT margin coming in better than expected, was definitely the bright spot for me," said David Schaefer, portfolio manager at Union Investment in Frankfurt. CEO Oscar Garcia Maceiras said some stores in the Middle East had closed temporarily due to the conflict, impacting sales slightly. "In the last weeks, some of our stores in a number of markets have been temporarily impacted," he said. "This has had a slight impact on the trading update we have provided today but ... currently most of our stores are open in the region." Maceiras declined to specify where stores were shut or for how long, and dodged questions at a news conference about longer-term impacts of the conflict. Analysts estimate the Middle East accounts for 4-5% of Inditex's sales. Inditex operates there through franchise partner Azadea, and its store numbers in Lebanon, Israel, and United Arab Emirates have increased over the past year. PROFITABILITY HELPED BY ZARA'S PUSH INTO HIGHER PRICE POINTS The pace of Inditex's sales growth has cooled since a post-pandemic boom, but its profitability has risen as it increased prices and improved stores and logistics to get new clothes to shoppers faster. “Inditex has started to address a bigger share of consumers,” Schaefer said. “Luxury brands have increased prices a lot so the gap that was always there kind of widened, and it gave Zara the opportunity to get into higher-priced items which feel elevated and look nice but still have a heavy discount compared to what luxury brands are offering.” As Zara stretches higher, Inditex is also growing its Gen Z-focused retailer Lefties , with UK and France openings planned for the cut-price label selling jeans for 12.99 euros ($15.08). Sales in the November to January quarter, including the key Black Friday and Christmas shopping periods, rose to 11.69 billion euros ($13.60 billion) from 11.2 billion euros a year ago, and for 2025 as a whole sales grew 7% in currency-adjusted terms, hitting 39.86 billion euros. Inditex has been closing smaller, less profitable stores and opening more spacious flagships with an upmarket feel. It has also invested 1.8 billion euros in building a second logistics hub in Zaragoza, and on Wednesday announced further capital expenditure of 2.3 billion euros for 2026. With fewer, bigger stores, Inditex said it expects store space to increase by 5% in 2026, after a 5.3% increase last year. Globally, the company had 5,460 stores at the end of January, 103 fewer than a year ago. Inditex's operating profit margin hit 20.1% in 2025, up from 19.6% in 2024 and much higher than its major rival H&M, which had an operating margin of 8.1% in 2025. ($1 = 0.8594 euros) Inditex sales growth has slowed after a strong post-pandemic run https://www.reuters.com/graphics/INDITEX-RESULTS/znpnmbwgavl/chart.png Inditex has increased its operating profit margin in recent years https://www.reuters.com/graphics/INDITEX-RESULTS/xmvjykawepr/chart.png (Reporting by Helen Reid in Paris and David Latona in Madrid Editing by Tom Hogue, Janane Venkatraman, Tomasz Janowski and Andrei Khalip) ((helen.reid@thomsonreuters.com))