Inditex Bounces Back: Third Quarter Sees Peak Profitability After Slow Start to Year

After a two-quarter hiatus, Inditex now looks a little more like Inditex. The Spanish fashion retail group, the international leader in terms of sales, closed the third quarter in clear recovery after a weak start to the year. Although far from its pre-2023 pace, the company is recovering in terms of sales growth and, above all, profitability, with a net income in the high range of the last two years.

The company that owns Zara ended the third quarter (August-October) with a 4.88% increase in sales, up to €9.814 billion. Excluding the impact of exchange rates, the evolution would have been 8.4%.

Although this is below the 9% increase that the company posted in the first five weeks of the period, the company has put behind it the weakness of the first and second quarters of the year, when its sales rose by only 1.52% and 1.69%, respectively, affected by exchange rates and developments in key geographies such as the United States. In the third quarter, it did not provide the evolution of sales by geographies and concepts.

Inditex, which started to slow down at the end of 2023, overcomes the slump of the first half of the year, marked by geographies and concepts

Although the data has been taken by the market with optimism and as a sign of a change in trend, it is the slowest evolution of Inditex in more than a decade (discounting the first two quarters of 2025 and the quarters affected by Covid-19).

At the end of 2023, Inditex began to show a new pattern in its evolution, with its sales leaving behind double-digit quarterly increases, ranging from then between 6.67% and 8.66%, until 2025. Although it breaks with the pattern of recent years, Inditex’s current evolution is in line with (or even above) that of most of its direct competitors, at a time of instability in consumption on an international scale.

With lower sales rates, Inditex’s business model (based on rotation, matching purchases to sales and, more recently, a high image) continues to work and the group’s profitability remains at record highs. In the third quarter, the group posted its highest gross margin in the last decade, at 62.2% for the period.

Moreover, the increase in net income was in the high range of the last two years. Just as sales suffered in the first and second quarters, net income remained stable (up 0.85% and 0.81%, respectively), while in the third quarter net profit increased by 8.92% to €1.83 billion.

After three fiscal years distorted by the Covid-19 comparable, in 2024 the evolution of Inditex’s result recovered the usual rhythms prior to 2019, settling in the single digit.

Having overcome the slump of the first two quarters of 2025, Inditex’s performance is once again superior to that of its main rivals: Sweden’s H&M, the U.S.-based Gap and Japan’s Uniqlo.

In the case of H&M, the third quarter runs from June to August, so that the months that make up Inditex’s third quarter are for H&M the final stretch of the fiscal year. In the third quarter of its fiscal year, H&M recorded a 3.38% drop in sales, while its net income soared by 39.23%, after declines of 51.79% and 21.76% in the first and second quarters.

Gap begins the year in February, so that its third quarter takes place in the same months as Inditex. The American company achieved a growth of 2.95% in the period, up to €3.94 billion, while the result shrank by 13.87%, impacted by changes in tariff policy, as it concentrates almost one hundred percent of its sales in the United States.

While H&M and Gap are in transition, applying cost-containment measures and focusing on strengthening their image to recover their positioning, Japan’s Fast Retailing is progressing even better than Inditex. The company that owns Uniqlo closed its fiscal year 2025 on August 31st, marked by a 12.8% increase in sales and a 16.4% increase in net income. In October, group sales soared 26.6% (25.1% like-for-like), while in November they rose 8.4% (7.6% like-for-like).