Home Business NewsBusiness Zara owner Inditex impresses in tough times

Zara owner Inditex impresses in tough times

by LLB Reporter
8th Jun 22 10:42 am

Despite a strong showing on Wall Street yesterday, the FTSE 100 was heading nowhere fast on Wednesday.

The UK market appears to have stalled, just as many rail travellers will if the nationwide strike planned for later this month goes ahead.

Investors are nervously eyeing US inflation figures due on Friday, with India’s central bank having just raised rates by more than expected as it looks to curb the inflationary threat.

AJ Bell investment director Russ Mould said: “There were signs that the UK housing market, which has been defying gravity ever since coming out of a deep freeze necessitated by the pandemic, might finally be coming back to earth as prices went up at the slowest rate since the start of 2022.

“Industrial outfit Melrose – which operates a buy, repair and sell strategy – got a big thumbs up from investors as the model delivered again. The company wasted no time off the back of the recently announced sale of its US Ergotron business, as it unveiled plans to buy back £500 million worth of shares.

“Despite the horrible backdrop for retailers in general the market was feeling positive about Zara-owner Inditex off the back of its latest results.

“Achieving the milestone of sales ahead of pre-pandemic levels and boosting gross margin despite the challenge of rising costs and supply chain issues is impressive.

“That this was achieved, at least in part, by raising prices is testament to its brands’ appeal with shoppers, though a recent slowing in sales growth shows the company is not immune to the impact of cost of living pressures on discretionary spend.

“Inditex has a track record of being on-trend and quick to market with its products thanks to a streamlined design and production process and it will need to bring all of this savvy to bear if it is to withstand the current pressures.

“Investors toasted City Pub as like-for-like sales continued to strengthen faster than expected – though how much of this was driven by the higher cost of a pint and how much related to increased volumes is open to question.

“The company is also looking to keep costs as low as it possibly can with a review of its menu offering. Achieving this without leaving its customers feeling short-changed is a key challenge.”

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