Zara owner Inditex sales disappoint on weaker dollar, cautious consumers

By Helen Reid

LONDON (Reuters) - Zara owner Inditex reported weaker second-quarter sales than expected on Wednesday, as the world's biggest listed fast-fashion retailer grapples with cautious consumers in what its chief executive called a "complex market environment".

In an encouraging sign, though, sales for the start of Inditex's autumn quarter, from August 1 to September 8, were up 9% in currency-adjusted terms compared to a year ago, a pick-up in pace from 5.1% growth over the first half.

Net sales for Inditex's second quarter ended July 31 were 10.08 billion euros ($11.81 billion), lower than the 10.26 billion euros expected by analysts, according to an LSEG estimate.

A weaker U.S. dollar was partly to blame. Inditex said currency changes would hit sales by 4% in 2025, more than the 3% impact it previously expected, as the weaker dollar means sales in the U.S. - Inditex's second-biggest market by revenue after Spain - are worth less in euro terms.

In a statement, Inditex CEO Oscar Garcia Maceiras called the first-half performance "solid", saying the company had achieved "satisfactory sales in a complex market environment", without elaborating further.

U.S. President Donald Trump has hiked tariffs on imports from a swathe of major trading partners, driving many clothing and sneaker retailers who source from factories in Asia to hike U.S. prices as they try to offset higher costs.

Holiday season spending by U.S. consumers is set for its biggest drop since the pandemic, a PricewaterhouseCoopers survey found last week, as uncertainty over the economic impact of U.S. tariffs hits shoppers.

Shares in Inditex are down 14% since the start of this year as investors adjust to a deceleration after four years of double-digit annual sales growth.

The slowdown has prompted questions about the strength of demand for Zara clothes, and the extent to which it will be able to raise prices in the U.S. to protect its margins.

Inditex's net profit for the first half grew just 0.8%, to 2.79 billion euros.

The Spanish company, which also owns retail brands Pull & Bear, Massimo Dutti, Bershka, Stradivarius and Oysho, has steadily gained share in the global apparel market since the coronavirus pandemic, according to estimates from Euromonitor, while Swedish rival H&M has struggled to grow.

Inditex has said its flexible supply chain and sourcing from factories closer to its main markets will help it adapt to U.S. tariffs.

($1 = 0.8536 euros)

(Reporting by Helen Reid; Editing by Inti Landauro and Jamie Freed)