Morning Note: Market News and Inditex
MARKET NEWS
Markets: US equity markets continued to grind higher on Tuesday with the S&P 500 closing 6038.81 +32.93 (+0.55%). European and US equity futures dipped as traders are waiting for US CPI data that’s expected to reinforce the Fed’s wait-and-see approach. Brent fell and gold gained. The yen pared losses after Japan’s finance ministry said it’s unrealistic for the government to buy back JGBs in July.
Trade Negotiations: The US and China agreed to a preliminary plan to ease trade tensions. American negotiators expect issues including rare earths to be resolved but the absence of further meetings signals that there is more to be done. The EU believes its US trade negotiations will extend beyond Trump’s July 9 deadline. Its best-case scenario is an agreement on deal principles by that date. An appeals court ruled Donald Trump can keep his global tariffs in place for now.
UK: Chancellor Rachel Reeves will announce hundreds of billions of pounds of investment in a spending review today.
Corporate: Tesla set June 22 as a tentative launch date for its robotaxi service. Peter Thiel-backed crypto firm Bullish confidentially filed for an IPO, the FT reported. Publicis snagged the $1.7 billion Mars account from WPP, people familiar said. Nintendo said Switch 2 sales exceeded 3.5 million units worldwide in the first four days.
Los Angeles enacted a curfew for some parts of the downtown area. Mass arrests are being initiated, the LAPD said. California Governor Gavin Newsom warned other states to prepare for similar unrest.
US Economic Data: US headline CPI is expected to hold at 0.2% in May from the previous month, while the core gauge is poised to tick up 0.3%. Traders boosted bets that the Fed will cut interest rates only once this year going in to the release.
Inditex – First Quarter Results
Inditex has released first-quarter results this morning that reflect a solid start to the financial year, although somewhat below expectations. Early trading indicates a negative market reaction, with shares edging lower by around 4%.
Inditex, the global fashion retailer behind brands such as Zara, Massimo Dutti, and Pull&Bear, reported group revenues of €8.3bn for the three months to 30 April 2025, up 1.5% year-on-year. When adjusted for currency movements and the leap year calendar effect, constant currency sales rose by 5.3%. The Spring/Summer collections have been well received across both store and online channels, with current quarter trading (1 May to 9 June) showing a 6% sales increase on a constant currency basis.
Gross profit increased by 1.5% to €5.0bn, with gross margin holding firm at 60.6%, a marginal decline of 4 basis points compared to the prior year. Operating expenses were tightly managed, rising by 2.3%, which helped offset inflationary pressures and maintain operating efficiency. EBITDA increased 1.0% to €2.4bn, while EBIT rose 0.3% to €1.6bn. Pre-tax profit was flat at €1.7bn, reflecting a PBT margin of 20.2%. Net income rose modestly by 0.8% to €1.3bn.
Inventory levels were up 6% year-on-year at €3.8bn, a level the group described as high quality and consistent with the performance of recent collections. The company ended the quarter with a strong net cash position of €10.8bn, underlining its financial resilience.
Inditex reiterated its confidence in its long-term growth strategy. The company continues to invest in its integrated digital and physical retail model, including a €1.8bn capital expenditure plan for 2025. Logistics capacity enhancements remain on track, with the Zaragoza II distribution hub expected to come online this summer. Store optimisation and refurbishment continue across key global markets including Athens, LA, Seoul, and London Oxford Street.
Looking ahead, the group maintains its forecast of around 5% annual gross space growth through 2026 and expects a stable gross margin (+/- 50bps) for FY2025. At current exchange rates, a 3% negative currency impact on full-year sales is anticipated.
The Board also reaffirmed the proposed full-year dividend of €1.68 per share, split between two equal payments in May and November 2025. The Annual General Meeting is scheduled for 15 July 2025, where the appointment of Roberto Cibeira to the Board will be proposed, following the retirement of José Arnau.
