Zara owner Inditex missed expectations for first-quarter sales and early summer trading today, as tariff fallout complicated the fast-fashion retailer's efforts to maintain strong growth.
Concerns about resurgent inflation and an economic slowdown triggered by US President Donald Trump's erratic tariff rollout have already dampened shopping enthusiasm in the US and other major consumer markets.
Inditex's competitors have also experienced a sluggish spring.
The company reported a slower start to its summer sales, with currency-adjusted revenue growth of 6% from May 1 to June 9, compared to analysts' expectations of 7.3%, and down from 12% growth in the same period a year ago.
Revenues for its first quarter ending April 30 were €8.27 billion, missing analysts' average estimate of €8.36 billion, according to an LSEG poll.
Net income increased 0.8% in the quarter, to €1.3 billion.
Inditex shares were down 4% in early trading, making it the second-worst performer on the Stoxx 600 index.
Inditex did not provide a reason for the weaker sales growth. In a statement, it called its performance "solid", having labelled it "very robust" at its previous results announcement in March, when annual sales were up 10.5%.
"Overall weaker sales growth is a combination of demand volatility in Q1, but we need to take a step back and look at mid single-digit growth as actually being quite good in this environment," said Bernstein analyst William Woods.
Inditex rival H&M's sales have also struggled, growing by just 1% in March compared to 4% in the same time a year earlier. Its December-February revenue grew by 2%, below analyst forecasts.
Rainy weather in Spain, which accounts for 15% of Inditex's global sales, has also likely hurt the company's performance, according to Bernstein analysts.
Spain experienced one of its wettest ever springs, with Madrid recording three times its usual levels of rainfall for the season.
With volatility in foreign exchange markets driven by trade risks, Inditex said currency fluctuations will have a bigger impact than previously expected, predicting a 3% negative effect on its 2025 sales, compared with the 1% it flagged in March.
