Clothing company Inditex, which owns retailer Zara, posted better-than-expected first-quarter earnings on Wednesday following a recent fashion sales boom.
Net profit for the first quarter was 1.2 billion euros ($1.24 billion), a 54% rise from the previous year. Beating analysts’ expectations of a 980 million euros net profit, this gain was driven by a 16% sales boom for the company’s spring-summer collection.
By beating analysts’ expectations, the Spanish fashion house proved its resilience in an increasingly challenging economic environment, especially amid cost pressures such as a 20% rise in the average wage of store workers in Spain. Inditex’s reported 7.56 billion euros in sales fell in line with analysts’ expectations despite the sales of its profitable Russian division in 2022.
Inditex also proved to be a stronger performer than its rivals, particularly as H&M struggled to manage the cost of living crisis. Inditex’s online and in-store sales rose 13% to 7.6 billion euros for the quarter.
Part of Inditex’s pricing strategy has been to maintain higher prices for items sold outside of the eurozone. In markets such as the United States, Mexico, and Saudi Arabia, its brands’ prices can be up to 91% more costly than in its home market.