Inditex Chief Executive Officer Oscar Garcia Maceiras said constantly changing news on tariffs and geopolitics was making it difficult to make long-term predictions, the latest business leader to highlight the impact of uncertainty as U.S. President Donald Trump overhauls trade and foreign policy.
Inditex sales were up just 4% in currency-neutral terms over the February 1 to March 10 period, compared to 11% growth a year ago. Sales will have to accelerate significantly to meet analysts' forecast of 8.8% growth for the first quarter, Bernstein analyst William Woods said.
This was Inditex's weakest current trading update since 2016, setting aside the pandemic years, UBS analysts said.
Inditex gave no reason for the slower growth, but businesses have been warning of weaker demand, particularly in the United States, Inditex's second-biggest market by sales after Spain. The ongoing trade war with China, Mexico, and Canada has strained U.S. consumers.
"We live in an uncertain environment, an environment in which it is, logically, our obligation to monitor every piece of news that is produced. And throughout the course of a single day, contradictory news stories sometimes appear, making it difficult to make very long-term predictions," Garcia Maceiras said in a press conference at Inditex headquarters in Arteixo, northern Spain.
However, Maceiras said Inditex is well-positioned to adapt to tariffs, given its diversification in terms of sourcing and sales, and downplayed the recent slowing growth, saying this was only a short period at the start of the season.
"We are feeling optimistic about 2025," he said.
The company reported a 10.5% growth in full-year sales in currency-neutral terms, amounting to 38.6 billion euros ($42.07 billion). The key holiday shopping quarter delivered sales of 11.2 billion euros, in line with analysts' expectations.
Strong sales from Zara, which has been gaining market share from rivals such as H&M, have led to a more than doubling of Inditex's share price over the past three years, but the stock has struggled recently as concerns grow about consumer demand.
"Inditex can no longer grow in sales at the rate we were used to," said Xavier Brun, portfolio manager at Madrid-based Trea Asset Management, which holds shares in the group.
"But the market reaction is excessive," he added. "Inditex is investing heavily in logistics and this will allow it to gain efficiency, although consumption may fall in the coming quarters."
In comments on its 2025 outlook, Inditex said it had a "strong commitment to profitable growth" after net profit for 2024 grew 9% to 5.9 billion euros.
Inditex, which also owns the Bershka, Pull&Bear, Massimo Dutti, Stradivarius and Oysho brands, said it would hike its dividend by 9% to 1.68 euros per share.
Inditex plans capital spending of 1.8 billion euros this year as it invests in store refurbishments, technology and improving its online platforms.
The retailer, which operates in 214 markets around the world, plans to open in Iraq this year. Its brand aimed at younger shoppers, Bershka, will launch in Sweden, and sportswear and loungewear brand Oysho will open for the first time in the Netherlands and Germany.
Inditex has also been developing new formats aimed at encouraging shoppers to spend more time in stores, such as a "Zacaffe" coffee shop in a Zara menswear store in Madrid.
($1 = 0.9174 euros)
