Inditex shares sink 7% as Zara owner points to sales slowdown

Zara owner Inditex on Wednesday posted a year-on-year rise in fourth-quarter sales that met expectations, even as the retailer pointed to a slowdown in demand at the start of the year.

The Spanish retailer reported revenues of 11.21 billion euros [$12.2 billion] in the three-month period, matching the 11.2 billion euros forecast by LSEG analysts and up from the 10.34 billion euros recorded in the same period of last year.

Fourth-quarter net income came in at 1.42 billion euros, also in line with analyst expectations.

It follows a rare miss on sales and profit in the third quarter, which the company attributed partly to a stronger U.S. dollar.

Full-year sales rose 10.5% in currency-neutral terms to total 38.63 billion euros in 2024, just ahead of an anticipated 38.57 billion euros, while net income came in at 5.88 billion euros for the year, in line with forecasts. That compares to net sales of 35.9 billion euros and net income of 5.4 billion euros in 2023, which the company said were record highs.

The company, which also owns Pull & Bear, Bershka and Massimo Dutti, nevertheless pointed to a slightly slower pace of growth in first-quarter sales this year. Revenues were up 4% in currency neutral terms from Feb. 1 to March 10, versus 11% growth the year prior.

Shares were down 7.5% by 9:58 a.m. London time.

Mamta Valechha, consumer discretionary analyst at Quilter Cheviot, said the market reaction showed concern among investors about the extent to which the first-quarter "slowdown is a 'one-off' hurt by weather or a temporary dip in consumer sentiment ... versus whether this is the start of a more sustained slowdown in growth."

Asked about the slowdown during an earnings call, CEO Óscar García Maceiras said the company remained