Inditex, the Spanish fashion powerhouse behind Zara, reported net income of €1.4 billion in the first quarter, up 5.4% year-on-year and ahead of market estimates. Sales grew 5.8% to €8.7bn, or 8.8% at constant exchange rates, beating the around 8% expected by analysts.
Gross profit increased 6.9% to €5.4bn, aided by improved profit margins, indicating the corporation retained a bigger share of revenue as profit. Underlying earnings, as measured by EBITDA, rose 7.3% to €2.6bn.
Inditex shares jumped more than 5% on Wednesday on the back of a solid start to the second quarter, with sales up 11.5% between 1 May and 1 June, reassuring investors that the Zara owner remained resilient despite signs of declining consumer spending.
“Inditex has continued its strong momentum with its latest results beating first quarter expectations, and also seen a strong start to the second quarter too, as sales grew more or less in line with the rate the company exited with in the previous quarter,” said Mamta Valechha, consumer discretionary analyst at Quilter Cheviot.
The rise in revenue from one of the world’s largest listed clothes retailers suggests a healthy consumer appetite going into the summer, even as questions remain about a more uncertain economic and geopolitical background that could weigh on spending in the coming months.
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