Rate Hike Impact: Inditex’s Growth Dips by 7.2 Points in Three Years

Interest rates are becoming one of the main headaches for companies in the highly internationalized fashion industry. Year after year, the currency impact eats away points of growth for some of the major groups, with Spanish giant Inditex leading the way. Over the past three years, foreign exchange has eaten 7.2 points of cumulative growth for the group that owns Zara.

According to information made public by the company itself, Inditex closed fiscal year 2022 (the first practically normalized after the pandemic crisis) with an increase in sales of 17.5% at current exchange rates, i.e. taking into account the current rate at which one currency can be exchanged for another. At constant rates, i.e. eliminating the impact of exchange rate fluctuations and showing only changes in business activity, growth stood at 18%.

In the following year, the group’s growth at current rates was 10.4%, rising to 14.1% at constant rates, while in 2024 (closed last January) Inditex’s sales increase was 7.5%, 10.5% at constant rates. Thus, in three years, the group has lost an aggregate 7.2 points of growth, or an average of 2.4 points annually.

Inditex has lost an aggregate 7.2 points of growth in three years, or an average of 2.4 points annually

The currency impact continues in the current fiscal year. Last week, the company reported that sales grew by 1.6% in the first half, to 18.357 billion euros, while sales at constant exchange rates rose by 5.1%. Inditex forecasts that, at current exchange rates, the currency impact will be approximately 4% of sales for the current year as a whole.

For one of Inditex’s biggest rivals, the Swedish group H&M, the impact of exchange rates has been favorable. With the Swedish krona as the reference currency, H&M has gained eleven points of cumulative growth over the past three years, or an average of 3.6 points each year.

In 2022, the company grew by 12% at current rates and by 6% at constant rates; in 2023, it increased sales by 6% at current rates and reduced them by 1% at constant rates, and in 2024 the evolution has been negative by 1% in the first case and positive by 1% in the second.

With the Swedish krona as the reference currency, H&M has gained eleven points of cumulative growth over the past three years

Inditex’s high exposure to the United States works against it. At the end of 2024, the U.S. market was Inditex’s second largest market in terms of sales volume. Sales in the American continent amounted to €7.18 billion at the end of the fiscal year, representing 18.6% of the total. A year earlier, sales in the Americas accounted for 19.6% of the total, although sales in the region were lower, at €7.045 billion.

In the first half of 2025, however, America has lost weight in Inditex’s overall business, which has increased its exposure to Europe, which would play in the company’s favor in terms of rates. In the period, the weight of sales in the Americas as a percentage of the total fell by one full point compared to twelve months earlier, to 17.8%.

In Spain, the group accounted for 15.5% of its sales in the first half of the year, equivalent to €2,845.3 million. With a 7.1% jump compared to the same period of the previous year (even higher than the evolution of sales at constant rates in the first half, which increased by 5.1%), the country gained 0.8 points in weight over the total compared to a year ago.

In the rest of Europe, the jump was also 0.8 points, to once again surpass the 50% mark. In the period ended July 31st, Inditex sold products in the rest of Europe for a total of €9.307 billion, 3.2% more than in the first half of 2024. Thus, the weight of Europe in Inditex’s total business increases to 66.2%: 15.5% from Spain and 50.7% in the rest of the European continent.