# Zara owner Inditex’s first-half sales surge ahead of potential slowdown Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2022-09-14 Category: NEWS Category URL: https://financedigest.com/category/news Meta Title: Inditex Reports 41% Profit Jump in Strong First Half Results Meta Description: Inditex, owner of Zara, reports strong financial results, but faces challenges ahead due to rising inflation affecting demand for clothing URL: https://financedigest.com/zara-owner-inditexs-first-half-sales-surge-ahead-of-potential-slowdownhtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/2022-09-14t054209z2lynxmpei8d05urtroptp4inditex-zara-stores-1736815217268-compressed.jpg) MADRID (Reuters) – Fashion brand Zara’s owner Inditex said on Wednesday that profit for the six months to July jumped by 41% and sales rose by around a quarter, putting it on a strong footing ahead of second half likely to see rampant inflation hitting demand for clothing. In the first set of results since its founder’s daughter, Marta Ortega, took over as new non-executive chairman, the company said revenue for the period rose to 14.84 billion euros ($14.82 billion) from 11.9 billion euros a year earlier. It booked a net profit of 1.79 billion euros from 1.27 billion euros last year. CEO Oscar Garcia Maceiras said [sales were rising](https://www.financedigest.com/mercedes-posts-rise-in-q1-sales-boosted-by-evs-premium-cars.html "Mercedes posts rise in Q1 sales boosted by EVs, premium cars") in the most recent weeks. However, the annual [growth rate](https://www.financedigest.com/u-s-job-growth-powers-ahead-unemployment-rate-at-3-4.html "U.S. job growth powers ahead; unemployment rate at 3.4%") slowed slightly since the end of the first half to 11% in constant currency terms from Aug. 1 and Sept. 11. The results were in line with analyst forecasts, which flag that autumn and winter will likely be challenging as the soaring [cost of living weakens demand for fashion and leaves shoppers less keen to buy](https://www.financedigest.com/blessing-or-burden-what-else-could-you-buy-for-the-cost-of-your-timeshare.html "Blessing or burden? What else could you buy for the cost of your timeshare?") clothing at higher prices. Inditex had decided to increase its prices early in the [year to cope with inflation at a time when shoppers worldwide were buying more clothes for holidays](https://www.financedigest.com/100-years-of-uk-holidaying-habits.html "100 YEARS OF UK HOLIDAYING HABITS"), events and the return to the office after the lifting of COVID restrictions. Inditex has delivered a very strong absolute and relative performance,” [Deutsche Bank](https://www.financedigest.com/citigroup-to-buy-deutsche-bank-license-in-mexico-for-wholesale-unit.html "Citigroup to buy Deutsche Bank license in Mexico for wholesale unit") analyst Adam Cochrane said. But the lower consumer confidence is likely to see clothing sales decline in the [second half of the year](https://www.financedigest.com/ericssons-board-rebuked-by-shareholders-at-agm-for-second-year-in-a-row.html "Ericsson’s board rebuked by shareholders at AGM for second year in a row") and into 2023 although price increases in the cost of clothing will help revenues”, he added. Inditex has broadly maintained its strategy of producing at [least half of its garments close to its headquarters in Spain and the higher proportion of proximity sourcing](https://www.financedigest.com/exclusive-foxconn-woes-could-hit-at-least-30-of-iphone-nov-shipments-from-china-plant-source.html "Exclusive: Foxconn woes could hit at least 30% of iPhone Nov shipments from China plant – source") benefited the company during the supply chain crisis. Analysts are expecting negative earnings momentum and weaker sales for Inditex’s biggest rival, Sweden’s H&M, and consider the Spanish retailer better placed than competitors to [face the challenges](https://www.financedigest.com/under-saved-and-underprepared-women-face-challenges-saving-for-retirement.html "UNDER-SAVED AND UNDERPREPARED: WOMEN FACE CHALLENGES SAVING FOR RETIREMENT"). Inditex said its gross margin reached 57.9% during the first [half of the year](https://www.financedigest.com/an-apple-a-year-half-of-iphone-users-will-upgrade-to-the-iphone-7.html "AN APPLE A YEAR: HALF OF IPHONE USERS WILL UPGRADE TO THE IPHONE 7"), the highest in seven years. The company added that has [temporarily sped up its inventory to avoid supply](https://www.financedigest.com/exclusive-kazakh-mcdonalds-shut-outlets-temporarily-after-halting-supplies-from-russia-sources.html "Exclusive-Kazakh McDonald’s shut outlets temporarily after halting supplies from Russia – sources") chain snags. As of Sept. 11, inventory [levels were 33% higher](https://www.financedigest.com/u-s-dollar-drifts-higher-yen-heads-toward-level-that-prompted-intervention.html "U.S. dollar drifts higher; yen heads toward level that prompted intervention") than a year earlier. ($1 = 1.0012 euros) (Reporting by Corina Pons, editing by Inti Landauro and Louise Heavens) --- This blog is powered by Superblog. 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