Shares in Zara owner Inditex sink despite record profit

ALGORITHIMS RUN WALL STREET

By AFP
March 12, 2025


Inditex is 'optimistic' about its growth opportunities 'despite a particularly complex and demanding environment', chief executive Oscar Garcia Maceiras told a press conference - Copyright AFP/File Frederic J. BROWN
Valentin BONTEMPS

Zara owner Inditex posted Wednesday another record annual profit but investor worries that sweeping US tariffs could hurt its growth prospects caused shares in the world’s biggest fashion retailer to slide.

The Spanish group, which owns other top brands including Massimo Dutti, Pull & Bear and Bershka, posted a net profit of 5.87 billion euros ($6.39 billion) in the fiscal year which ended on January 31.

The figure was up 9.0 percent from 5.38 billion euros in 2023 and marked the company’s third consecutive annual profit.

Inditex pointed to “very satisfactory” sales, which rose 7.5 percent to hit 38.6 billion euros in 2024, and its “rigorous” cost control policy for the profit rise.

The company is “optimistic” about its growth opportunities “despite a particularly complex and demanding environment”, chief executive Oscar Garcia Maceiras told a press conference.

But sales growth showed signs of waning in the first quarter, rising just 4.0 percent between February 1 and March 10, compared to 11-percent growth in the same period a year ago.

This was the lowest pace of sales growth for the period since 2016, UBS analysts said in a research note.

The slowdown comes as Inditex is facing stiffer competition from low-priced Asian online retailers such as Shein, as well as the threat of higher tariffs in the United States, the company’s second-largest market after Spain.

These tariffs “represent a challenge for Inditex, both in its strategy of expansion in the United States and in the management of its global supply chain” since its clothes are partially made in China, said Alfred Vernis, professor at Spain’s ESADE business school and a former Inditex executive.



– ‘Growth is slowing’ –



Shares in Inditex fell by 8.2 percent in early afternoon trade on the Spanish stock exchange to 44.66 euros per share.

While Inditex “has been a clear outperformer in clothing retail”, the data suggests “growth is slowing”, Deutsche Bank said in a research note.

“The potential risks of US tariffs are also weighing on Inditex sentiment,” it added.

Maceiras said Inditex was “well positioned” in the trade war and stressed its “great flexibility to adapt to circumstances”.

“We have enormous diversification in terms of manufacturing origins,” he said, adding Inditex did not rule out producing some of its clothing in the United States if “opportunities” arose.

With fast-growing budget fashion retailer Shein taking share at the cheaper end of the market, Inditex’s main brand Zara has moved to attract more discerning shoppers and offered more expensive clothing.

Inditex is also improving its logistics to deliver online orders faster than rivals and investing in larger, more modern stores while it shuts smaller shops.

“Compared to its rivals such as H&M and Uniqlo, Inditex benefits from better cost control, higher margins and a stronger financial cushion, which guarantees long-term growth and stability in the dynamic fashion market,” said Vernis.

The company’s fundamentals remain “solid” and it should be able to “strengthen its leading position” in the budget fashion segment despite the trade tensions, he added.

Inditex’s main rival in the fast-fashion industry, Sweden’s H&M, in January posted lower sales for 2024 due to supply problems and greater competition from Chinese online companies.


Couche-Tard bosses make case in Tokyo for 7-Eleven buyout

By AFP
March 13, 2025


'We are going to invest in Japan,' said Alimentation Couche-Tard President Alex Miller (C) - Copyright AFP Kazuhiro NOGI

Julien GIRAULT

The directors of Canadian convenience store giant Alimentation Couche-Tard (ACT) said on Thursday they were seeking a “friendly” buyout of 7-Eleven but lamented a lack of progress towards a deal.

Seven & i, the Japanese parent company of 7-Eleven — the world’s biggest convenience store brand — rebuffed an ACT takeover offer worth nearly $40 billion last year.

Despite a sweetened bid reportedly worth around $47 billion, Seven & i announced last week measures including a huge share buyback to boost its value and fend off ACT.

“We are continuing to pursue a friendly, mutually agreed transaction,” ACT chairman Alain Bouchard told reporters in Tokyo.

It would be the biggest foreign takeover of a Japanese firm, merging the 7-Eleven, Circle K and other franchises to create what CEO Alex Miller described on Thursday as a “global champion of convenience stores”.

Seven & i said in September after ACT’s initial approach its rival had “grossly” undervalued its business and warned the deal could face regulatory hurdles in the United States.

The pair have said they are exploring US store sell-offs to address antitrust concerns ahead of any potential merger but Bouchard said this wasn’t enough.

“We are disappointed that this engagement has been limited to regulatory only and we have not been able to make progress on broader deal discussion,” he said.

Seven & i operates some 85,000 convenience stores worldwide.

Around a quarter of those outlets are in Japan, where they sell everything from concert tickets to pet food and fresh rice balls, although sales have been flagging.

ACT runs nearly 17,000 convenience store outlets globally, including Circle K.

Miller reiterated on Thursday that the retailer sees “a clear path to regulatory approval in the United States”.

That was because the ACT and 7-Eleven networks in the world’s biggest economy were “highly complementary”, he said.

Miller also addressed concerns that ACT ownership of Seven & i would affect the quality of 7-Eleven stores in Japan, which have been a local lifeline in times of disaster.

“We are going to invest in Japan,” Miller said. “We have no interest and no plans to close stores, fire employees. That’s not what we do. We invest to grow.”