Zara owner Inditex reported a better-than-expected start to its autumn trading on Wednesday, with currency-adjusted sales up 9% in August, even as extreme heat across Europe reshapes shopping behavior in its biggest market.
The fast-fashion giant made €11 billion ($12.8 billion) in sales in its second quarter running May to July, a strong showing in a summer of high energy prices and weak consumer sentiment amid the ongoing Iran war.
"These excellent results highlight the extraordinary capabilities of our teams," CEO Oscar Garcia Maceiras said in a statement, adding that it was operating in a "highly complex global environment."
Inditex is flying high: its share price hit a record of €59.1 last month, and the Hong Kong IPO filings of ultra-cheap fashion platform Shein revealed a sales slowdown, evidence that the competitive pressure on European fast-fashion groups like Zara and H&M is easing.
The Spanish company is expanding its cheapest brand, Lefties, into Britain, with plans to open in Germany next year, as Inditex tries to capture more spending from lower-income shoppers who may have been alienated by Zara's push into higher price points.
Inditex's gross profit grew 8.3% in the first half to €11.6 billion, with a gross margin of 58.7%.
Retailers in Europe and the US are having to change their sourcing schedules to adapt to hot weather that is stretching into the back-to-school season when stores usually start selling jackets and coats.
Western Europe had its hottest June and July on record, according to European Union scientists, as climate change pushes temperatures up and fuels wildfires across the region.
Inditex has been spending significantly on revamping stores and improving its logistics; RBC analysts estimate its annual capital expenditure is around three times that of its Swedish rival H&M.
