Inditex First-Half Profit Rises 6.8% as Early Second-Half Sales Gain 9%, but Q2 Margin Misses

Zara owner Inditex reported first-half net income of €2.98 billion, up 6.8% from a year earlier, as sales increased 7.6% to €19.76 billion. Constant-currency sales grew 9.2% in the six months through July 31, and the company said store and online sales in constant currency were up 9% from Aug. 1 through Sept. 7 compared with the same period in 2025.

The Sept. 7 trading update showed that demand had remained firm after the half-year cutoff, but the May-to-July quarter contained a softer profitability reading. Inditex’s second-quarter gross margin came to about 56.7%, slightly below analyst expectations, according to Reuters. Reuters also reported that the shares traded lower in Madrid after the release.

Inditex’s official half-year results showed gross profit of €11.60 billion, up 8.3%, and a first-half gross margin of 58.7%, 40 basis points above the prior-year period. EBITDA rose 7.8% to €5.51 billion and operating profit increased 7.6% to €3.84 billion. The quarter was still growing, but profitability came in below expectations even as the first-half gross margin improved.

Q2 grew from a year ago, but margin fell short of forecasts

Inditex does not present a separate second-quarter income statement in the half-year release, but its first-quarter and half-year filings make the quarter calculable. Subtracting the first-quarter figures from the six-month totals gives second-quarter sales of about €11.01 billion, up roughly 9.1% from €10.08 billion a year earlier. Net profit works out to €1.61 billion, about 8.0% higher than the comparable quarter, while operating profit was approximately €2.09 billion, also up about 8.1%.

The same calculation puts second-quarter gross profit at about €6.24 billion and gross margin at 56.7%. That was slightly better than the roughly 56.5% margin implied for the second quarter of 2025, so the disappointment was not a year-over-year contraction in gross margin. Rather, the result came in below what analysts had expected for the quarter, according to Reuters, despite continued growth in sales and profit.

Sales growth also accelerated from the first quarter on a reported basis. Inditex had posted a 5.8% rise in first-quarter sales to €8.75 billion, with constant-currency growth of 8.8%. By the half-year mark, reported growth had reached 7.6% and constant-currency growth 9.2%, which implies a stronger second-quarter top-line pace than in the opening three months.

Costs remained an important part of the margin picture. First-half operating expenses rose 8.3% to €6.05 billion, and Inditex said operating expenses including all lease charges grew 50 basis points faster than sales. The first-half net profit margin slipped to 15.1% from 15.2%, while the pre-tax margin eased to 19.5% from 19.6%. Reuters reported that Chief Financial Officer Andrés Sánchez Iglesias told analysts that disruptions in the Middle East had raised transport and input costs during the first half.

Early second-half sales keep the growth pace firm

The 9% sales figure is broader than a calendar-month August number. Inditex’s disclosed trading window runs from Aug. 1 through Sept. 7 and covers store and online sales at constant exchange rates. The company said its autumn and winter collections had been well received. Because the disclosure extends into September, it is more precise to treat the 9% figure as an early second-half trading measure rather than a calendar-month August number.

Growth in the first half was spread across the group’s concepts, although some of the smaller brands expanded faster than the Zara group. Zara, Zara Home and Lefties generated €13.78 billion of sales, up about 4.8% from a year earlier. Bershka sales rose to €1.68 billion from €1.44 billion, Stradivarius reached €1.57 billion from €1.33 billion, and Oysho increased to €472 million from €389 million. Pull&Bear and Massimo Dutti also posted year-over-year sales gains.

The geographic mix shifted modestly toward Europe outside Spain, which accounted for 51.5% of first-half sales compared with 50.7% a year earlier. The Americas represented 17.9%, Spain 15.6%, and Asia and the rest of the world 15.0%. Inditex ended July with 5,444 stores, down from 5,528 a year earlier, as it continued refurbishments, relocations, openings and store absorptions across 51 markets.

The lower store count has not stopped the group from adding selected locations. During August, Bershka opened its first U.S. store at Aventura Mall in Miami and its second store in Brazil at Rio Barra, while Zara added a location in Los Cabos, Mexico. The company also cited major store work at London Bond Street, Seoul Gangnam and Ostend in Belgium. Those projects fit its strategy of improving productivity and commercial space rather than using raw store count as the main measure of expansion.

Guidance stays intact as investment rises

Inditex kept its main 2026 operating assumptions in place. At current exchange rates, it expects currency movements to reduce reported sales by around 1%, while full-year gross margin is still expected to be stable within a range of plus or minus 50 basis points. Annual gross space is expected to grow about 5%, with the company also forecasting a positive contribution from net space and continued strength online.

Spending plans have increased. Inditex expects ordinary capital expenditure of around €2.3 billion this year and said it will invest close to an additional €200 million in upgrades to corporate facilities. The group has also completed the rollout of its new soft-tag technology across all stores, adding to systems such as Click & Collect silos, assisted checkouts and drop-off points as it continues to digitize the shopping process.

Net cash stood at €10.40 billion at the end of July, up 4% from a year earlier. Funds from operations reached €4.08 billion, up 11%, and the company’s free-cash-flow measure rose to €2.30 billion from €1.17 billion. Inventory was 9.3% higher year over year at €3.79 billion, which Inditex described as high quality. That was considerably above the 1% year-over-year inventory increase reported at the end of the first quarter.

The company’s filing with Spain’s CNMV records the same first-half figures and July 31 balance sheet. A final FY2025 dividend payment of €0.875 per share is scheduled for Nov. 2. Inditex’s next scheduled results update is Dec. 2, when it plans to report nine-month figures and provide the next full-quarter read on sales momentum and margins.