Inditex: A Year of Ascending the Fashion Hierarchy

A film, an interactive exhibition, the fifty most relevant top models in history in a single photograph and garments designed by Narciso Rodríguez, Alex de Betak, Almodóvar, Pierpaolo Piccioli and Rosalía. All this has served to ensure that 2025 will be engraved in the history of Inditex as the fiftieth anniversary of the opening of the first Zara store, but also as the year in which the company lost and regained the confidence of the market in less than twelve months. Inditex has shown in 2025 the patterns of its new path, confirming the ascent in the fashion pyramid and, incidentally, dismantling it.

The arrival of Marta Álvarez to the presidency of Inditex meant a change in the group’s strategy, at least with regard to its main chain and engine (until now) of its growth: Zara. Anticipating the market, the Inditex chairwoman said as early as 2022 that the future was not about growing a lot, but about gaining profitability. Since then, the chain has launched a strategy to raise its positioning through collaborations with the most prominent designers and niche brands, even more relevant stores and flirtations with lifestyle, launching categories such as hair care items or setting up a network of coffee shops. In short: raising positioning to justify higher prices, to gain profitability not through more volume but through bigger labels.

Along the way, Zara has further revolutionized the fashion pyramid. With Shein and the more extreme low cost pushing at the bottom, the sector has embarked on a climb, with Zara as the most prominent player. The Inditex chain has long ceased to be at the bottom of the pyramid to position itself in the middle segment by price, but now it is even pushing the affordable luxury in some markets. The losers, as always: those in the middle. While in Spain, Inditex’s home market, the disappearance of mid-segment operators began with the Great Recession, in markets such as France the impact has become more acute this year.

It has taken the stock market a whole year to assimilate this movement, with the share falling after each presentation of results, since in the third quarter of 2023 the company left behind double-digit sales. Inditex started the year at €50.32 per share and climbed to over €55 in mid-February. The 2024 results led the share to fall to 44.5 euros, to evolve in a sawtooth pattern until it hit yearly lows in early August. In December, with the third quarter on the table, the stock reached all-time highs.

After ending 2024 with 7.5% growth, exceeding 38.5 billion euros in sales, and raising its net profit by 9%, the company ended the first quarter (between February 1 and April 30) with weak results. The company raised its sales by only 1.5% in the first quarter, to 8.274 billion euros, and increased its net profit by 0.3%, to 1.305 billion euros, compared to the same quarter of 2024.

In the year in which Zara celebrated the fiftieth anniversary of its first store, the chain has perfected its collaborations, flirting with lifestyle

At the end of the first half, the trend continued. The Galician group ended the period with a 1.6% increase in sales, to 18,357 million euros, and an increase of only 0.8% in net income, to 2,791 million euros. The second quarter thus closed with the second-lowest growth rate since the first quarter of 2021, with a sales increase of only 1.69%. Profitability performance was also in line with that of the first quarter: the company earned 0.81% more, compared to 0.85% in the first quarter.

After the hiatus of the first two quarters of the fiscal year, the third quarter arrived with Inditex still far from the past, but recovering the development of sales and affirming its profitability. The company ended the third quarter (between August and October) with an increase in sales of 4.88%, up to 9,814 million euros, a figure that was embraced with optimism by the market despite being the lowest in more than a decade.

With more discreet sales rates, Inditex’s business model (based on rotation, the adaptation of purchases to sales and, now, a high image) continues to work and the group’s profitability remains at a record high. In the third quarter, the group posted its highest gross margin in the last decade, at 62.2% for the period. In addition, the increase in net income was in the high range of the last two years, up 8.92% to 1,831 million euros.

The Zara store on Juan Flórez street in A Coruña has dressed up in 2025 to celebrate its fiftieth anniversary, with an interior design that honors the architecture of the Spanish city and the history of the chain.

Exchange rates have been a constant drag on Inditex’s results throughout the year. The depreciation of the dollar and the appreciation of the euro have had an impact on the group, which is highly exposed to currency fluctuations due to the international nature of both its sourcing and sales. In the third quarter, for example, discounting the impact of exchange rates, sales would have increased by 8.4%.

In addition to exchange rates, Inditex is also hurting Zara. In the first half of the year, Zara’s sales, in which Inditex also includes Zara Home and Lefties, reached 13.15 billion euros, 0.89% more than twelve months earlier. Zara recorded the lowest growth of the entire group, with the exception of Massimo Dutti, which decreased.

At the end of the half-year, the combined turnover of the three concepts accounted for 71.63% of the total, half a percentage point less than a year earlier, when the weight within the group was 72.1%. Thus, part of Inditex’s slowdown can be attributed to the slower growth rate of the group’s main chain, which is impacted to a greater extent by exchange rates due to its high international presence.