Updated 2:48 p.m. ET March 12
LONDON — Zara parent Inditex shrugged off the threat of tariffs in the U.S., the company’s second largest market after Europe, as it reported a 10.5 percent uptick in sales and historic highs in profitability in fiscal 2024.
Chief executive officer Oscar Garcia Maceiras said that while the impact of import tariffs was difficult to predict, Inditex is in a good position due to its “geographical diversification in terms of sourcing and sales. We operate in many markets, and we have experience dealing with different tariff regimes.”
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He added that the company’s flexible business model and “proximity sourcing” strategy allows it to adapt to last-minute changes.
Reinforcing that point during an analyst call on Wednesday, Maceiras reconfirmed guidance of a flat gross margin plus or minus 50 basis points for 2025. Gross margin in 2024 was 57.8 percent.
Inditex is looking to the future with confidence following a strong 2024, with sales up 10.5 percent at constant currency to 38.6 billion euros. At reported exchange rates, sales grew 7.5 percent.
EBITDA, or earnings before interest, taxes, depreciation and amortization, rose 8.9 percent to 10.7 billion euros, while net income in the 12-month period was up 9 percent to 5.9 billion euros.
Maceiras touted the group’s “solid, profitable growth, commercial offer and efficiency in all operations.” He said the group continues to show its ambition and strength “50 years after the opening” of the first Zara store in A Coruña, Spain.
By contrast, the current year was off to a slow start, with sales up 4 percent between Feb. 1 and March 10 compared with analysts’ projections of 7 to 8 percent growth.
Although sales growth surged to 7 percent over the past week, it was not enough to placate the markets. Inditex shares closed down 7.5 percent at 45 euros on Wednesday.
Deutsche Bank said the 4 percent growth figure was “below the bottom end of the [wide] range we have discussed with investors,” but said it was too early to tell how the year would evolve.
“While this is a large slowdown, we would not read too much into one weak month,” the bank said.
Likewise, Morningstar senior equity analyst Jelena Sokolova called the 4 percent growth figure “disappointing,” but added that “it’s too early to extrapolate the slowdown into the future.”
Inditex attributed its 2024 growth to its efficient stores, improved logistics and strong fashion offer.
In-store sales climbed 5.9 percent in the 12-month period, reflecting incremental footfall and increasing productivity.
The company said its ongoing store optimization and digitization program “continues to be key,” and said the higher level of store sales was achieved with 2 percent more commercial space, and despite 2.3 percent fewer stores than in 2023.
In 2024, gross new space increased by 5.8 percent. That space has also become more efficient, with sales per square meter 28 percent higher in 2024 than in 2019.
At year end, Inditex counted 5,563 stores in 214 markets, and said that its comparatively low market share in a “highly fragmented” sector presented a long-term growth opportunity.
Looking ahead, the company said it would continue to optimize its store estate and improve the in-store experience for clients.
It has been rolling out new “soft tag” alarm technology, eliminating the need for old-fashioned plastic security pegs.
Inditex called the new tech a “significant improvement in customer experience, facilitating interaction with our products and improving the purchasing process.”
The group is also ramping up the digitization of the physical stores, and integrating them into the various online platforms.
Inditex is working on other customer service fronts, too. In late November, it opened the first Zacaffè at the new Zara menswear store in Madrid.
Designed by Art Recherche Industrie, the chic café has interiors that pay tribute to Neo-Mudéjar, a 19th-century Moorish Revival architecture style. Others are set to open in Seoul and Osaka this year.
Overall, the growth of annual gross space in the period 2025-26 is expected to be around 5 percent, with capital expenditure set to be 1.8 billion euros, the company said.
Zara, the flagship brand, will launch in new locations including Nanjing Xinjiekou, Athens Minion, Eindhoven Rechtestraat and Osaka Umekita, while standalone Zara Man stores are set to open in places including Zúrich Bahnhofstrasse.
The Inditex brands are also breaking into new markets this year, with Zara set to launch its first stores in Iraq, and Bershka and Massimo Dutti opening for the first time in Denmark, the heartland of rival H&M Group brands.
Stradivarius will open its first store in Austria, while Oysho will debut in The Netherlands and Germany.
Investment in physical stores has proven a winning formula for Inditex and set it apart from online-only rivals, which are increasingly competing on price and pivoting to marketplace models as they seek to grow market share.
As reported earlier this week, the once-mighty British fast-fashion site Boohoo announced it was rebranding, becoming Debenhams Group, and switching to a marketplace model.
Shein launched its marketplace in 2022, while Next has built a thriving online marketplace that operates alongside the company’s physical stores.
In 2024, online sales at the Inditex brands played a significant, but supporting role.
Inditex said that online grew “satisfactorily,” by 12 percent to reach 10.2 billion euros. The company said customer engagement remains very high, with online visits growing 10 percent to 8.1 billion in 2024.
In 2024 the company also sharped its focus on logistics via an extraordinary, two-year investment program that continues into this year.
As reported, Inditex has allocated 900 million euros per year in a bid to strengthen its capabilities and address “strong global growth opportunities in the medium- and long-term.” The company said its investments have “the highest standards of sustainability and use the most up-to-date technology.”
Inditex has also been making moves on the fashion front.
The company said that during 2025 it would be rolling out new collections including Zara Woman The New; Massimo Dutti Gravity; Pull&Bear We Are the Landscape; Bershka Retro Sport; Stradivarius Denim of Interest; Oysho Back to Training, and Zara Home Editions.
The company said those collections “show our strong commitment to creativity [from] a talented team that is focused on innovation and adaptation to what our customers are looking for.”
The company is also making strides on the environmental front, and said that last year 73 percent of the textile fibers used in its garments were “lower-impact” fibers.
The company said its goal is to reach 100 percent use of lower-impact textile fibers by 2030. Of the total textile fibers used in 2024, 39 percent were made from recycled fibers; 23 percent from organic and regenerative fibers, and a further 10 percent from other lower impact fibers.
Inditex added that with a view to the 2030 objective, it is investing in innovation in order to drive capacity with respect to those lower impact fibers.
The innovations are being spearheaded by the Inditex Sustainability Innnovation Hub, which aims to develop fibers through more than 30 pilot programs and the investment in start-ups such Infinited Fiber, Galy and Epoch.