Sales Surge

Zara’s Parent Surprises With Holiday Boost

Spanish fast-fashion giant Inditex jolted markets, with sales jumping more than 10% during the crucial period between November 1 and December 1.

• Q3 sales at €9.8 billion, jumping over 8% year-on-year at constant currency
• Net income at €1.8 billion, up by 9%
• Net income margin at 19% — a metric of profitability as a percentage of the revenue.

Better-than-expected performance sent Inditex shares soaring by more than 10% in Madrid on Wednesday. The company owns global fashion chain Zara, as well as a slew of other brands, including Pull&Bear, Massimo Dutti, Bershka, and Oysho.

Inditex Offers a Holiday Season Preview

As most companies won’t reveal their numbers for the Black Friday sales season until early next year, Inditex’s update gave investors a precious sneak peek at how the retail sector is doing.

Other early data:

• MasterCard: Spending on Black Friday weekend in the US was up over 4%, with online sales jumping 10%.
• Adobe Analytics: Black Friday online sales hit $11.8 billion in the US, up 9% from last year.
• Footfall: Shoppers are less inclined to visit stores physically, with initial data showing Black Friday weekend footfall down in the US and the UK.

Inditex’s Strategy in Fast Fashion

The fashion group has shrunk its global store count to 5,527 — nearly 2,000 fewer than at the end of 2019 before the pandemic-related lockdowns hit the industry.

Instead of volume, Inditex is focused on high‑traffic flagships with self‑checkout and nearby logistics hubs. This lowers costs, delivering higher productivity per square meter.

Inditex relies on lean inventories, minimal marketing, and quickly changing collections, produced only in small batches. This model has worked well against its main rival, Swedish H&M, which relies on steeper discounts.

Chinese Challengers Test Fashion Business Models

Chinese online platforms like Shein, Temu, and AliExpress churn out thousands of new styles daily, shipping them straight from factory floors to consumers. Supersonic fashion cycles and rock‑bottom prices siphon demand from H&M, Primark, and even Inditex’s Zara.

But this model comes with quality concerns, labor scrutiny, and environmental impact — even more so than with traditional fast fashion.

Regulatory pressure is rising: In 2024, nearly 1.4 billion packages valued under $800 entered the US duty‑free. That advantage vanished in August, when the White House scrapped the exemption. The EU aims to scrap similar exemptions to cheap parcels in 2026, and is also forcing fashion retailers to pay to clean up textile waste.

What to Watch in Fast Fashion Stocks

• Margins vs. markdowns: Margin resilience signals pricing power; markdowns erode profitability fast.
• FX and costs: Currency swings can impact results. The strong euro shaved off around 4% of Inditex’s revenue in Q3.
• Store mix: Flagship productivity vs. smaller shop closures is a key trend.
• Brand risk: Labor standards, sustainability, and product quality can impact reputation and performance.
• Who’s on top: Fierce rivalry to Inditex from H&M, Primark, Uniqlo, Gap, ASOS, and Chinese platforms.