about 1 year ago • 2 mins
Clothing giant Inditex reported respectable quarterly results on Wednesday, after making eyes at big spenders all quarter.
What does this mean?
Inditex navigated this year’s tepid consumer spending pretty deftly, upping its prices to protect margins. And while some rivals joined a race to the bottom, Inditex focused more on high-rolling luxury shoppers instead, producing a raft of high-profit, high-fashion offerings. The titan had another trick up its sleeve too: trusty supply chains that let it get designs on store shelves at double time. That kind of worked, but the firm’s quarterly report showed the giant’s not completely invincible. Sure, sales grew by 11% versus the same time last year, but that’s down from 15% the quarter before – and sourcing costs grew even faster. Overall then, Inditex saw its net profit grow a middling 6% this quarter – good, but not amazing for the world’s biggest fashion retailer, whose brands include Zara, Bershka, and Massimo Dutti.
Why should I care?
Zooming in: Dreaming of a strike Christmas.
Analysts think Inditex’s cost pressures are set to weigh on the firm even more going forward. After all, Inditex has already been hit by a wave of strikes, including one on Black Friday in its biggest market, Spain. And since there are even more planned, that could thin out the firm’s festive results. But striking workers had better hope Inditex doesn’t copy its arch-rival H&M, which this month became the first European retailer to start laying off staff in a bid to cut costs.
Zooming out: Price turning point.
Higher costs are irking everyone right now, not just retail titans. But this week’s data suggested inflation’s easing in the US, and it seems that the UK is now following suit. Data out on Wednesday showed that British prices rose by 10.7% last month, lower than expected and a welcome cooldown after October’s 11.1% jump. With a little luck, then, the UK’s inflation might already have passed its peak.
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