Shares in Zara’s parent company fall on downgraded estimates
Written by Hannah McGrath
Zara’s parent company Inditex has seen its share price tumble to its lowest level in six months after Morgan Stanley slashed its estimates for the world’s largest fashion retail group.
Analysts at Morgan Stanley cut their target price for Inditex to €21 per share from earlier estimates of €26.
A report issued by the investment bank stated that the parent of retail brands including Zara, Bershka, Oysho, Pull and Bear and Stradivarius has been a “fantastic” long term performer but that as the business matures, with more than 6,000 stores in 63 countries, its financial performance was increasingly “ordinary.”
Morgan Stanley analysts Geoff Ruddell and Amy Curry stated “Inditex is still a world-class retailer, but its investment proposition has been weakening for some years.”
In June this year Zara, the group’s leading high street fashion brand, launched a tech-driven store concept in London.
The 4,500 square metre store in Westfield Stratford featured a dedicated area for the purchase and collection of online orders as part of the company’s wider strategy to integrate its in-store and online platforms.
The gloomy forecast and faltering share price comes despite Inditex recording record first quarter results in June, with net sales rising two per cent to £5.64 billion. The company is expected to post first half profits on September 12.