By Corina Pons and Helen Reid
MADRID (Reuters) -Zara owner Inditex (BME:ITX) posted a rare miss on quarterly sales and profit on Wednesday, although the world's biggest listed fast-fashion retailer said the holiday shopping season had got off to a good start.
Shares in Inditex fell around 5% as investors digested results hit by currency fluctuations and floods in Spain, Inditex's biggest market.
Third-quarter sales of 9.36 billion euros ($9.84 billion) came in below the 9.51 billion expected by analysts. An 8.5% rise in nine-month net profit to 4.44 billion euros also lagged the 4.52 billion expected by analysts.
"While the figures are not too bad, they do not meet the company's growth line and show a bigger slowdown than we estimated," said XTB analyst Javier Cabrera, adding that next year brings new risks such as U.S. trade tariffs likely to drive inflation up.
Severe floods at the end of October in Spain had a "very limited" impact on Inditex's performance, with three stores closed, capital markets director Marcos Lopez told analysts on a call.
But a strong dollar and weak euro hurt results, analysts said, as Inditex makes most of its sales in euros.
"Despite the quarterly setback, affected by the weather and the exchange rate, I believe the company continues on its growth trajectory," said Xavier Brun, portfolio manager at Madrid-based Trea Asset Management, which holds Inditex shares.
Zara has been investing in larger stores, logistics centres and marketing, launching a collection with supermodel Kate Moss, as it tries to maintain its edge over fast-fashion rivals like H&M (ST:HMb) and Shein, which sell at lower prices.
Inditex reported revenues up 9% in currency-adjusted terms in the six weeks to Dec. 9, which includes key Black Friday sales, slower sales growth than the 14% reported a year ago.
"We had a strong start to the last quarter against a demanding comparable in the same period of 2023," Lopez told Reuters. He also said Inditex expected a smaller impact from currency fluctuations in its fourth quarter.
In a sign of the market's confidence in the company, Inditex's shares are trading at around 26 times expected earnings for the next 12 months, above H&M's price-to-earnings ratio of 19.3 times.
The stock is up 32% since the start of the year.
($1 = 0.9500 euros)