Early summer sales beat forecasts at Inditex, shares spark

(Sharecast News) - Shares in Zara-owner Inditex jumped on Wednesday, after early summer trading at the Spanish retail giant comfortably beat expectations.

The company - which also owns smaller brands Massimo Dutti, Pull&Bear and Bershka, among others - said its spring and summer collections had been "very well received" by customers, with sales growing 11.5% in May on a constant currency basis. Analysts had been expecting growth of around 8%.

The update came as Inditex posted first-quarter sales of �8.7bn, an 8.8% improvement and at the top end of forecasts for growth of between 8% and 9%. Earnings before interest and tax jumped 7% to �1.8bn, with the gross margin improving 67 basis points to 61.2%.

Inditex said: "The flexibility and responsiveness of our business in conjunction with in-season proximity sourcing allows a rapid reaction to fashion trends and reinforces our unique market position."

As at 1000 BST, the Madrid-listed shares were trading 6% higher.

Investors have been concerned that consumer spending will falter in the face of rising inflationary pressures, as the war in the Middle East drags on. Gorka Garcia-Tapia Yturriaga, Inditex's investor relations director, acknowledged the difficult backdrop in in a call with analysts, reported by Reuters.

"This performance is even more noteworthy when considered against the backdrop of the wider macroeconomic and geopolitical challenges seen in recent months," he said. He noted that sales in the Middle East had been impacted by the US-Iran war, though did not provide specific figures.

Chief financial officer Andres Sanchez said: "There is a lag effect between the transportation of goods and the impact on costs of goods sold, which means that the impact of the higher transport cost and fuel prices in the first quarter has so far been limited."