Inditex shares fall: markets give a cold reception to John Galliano's Zara collection

Madrid – It has been exactly one week since the launch on October 1 of the first collection designed by John Galliano for Zara. The collection was set to be a turning point in the commercial dynamics of the Inditex group's main fashion chain. However, it has been met with a very cold reception from the markets. This is despite the latest analysis of the company issued by the US investment bank Jefferies.

Starting with this point, one of the week's notable financial news stories related to Inditex was the circulation of the first excerpts from the Jefferies report on Monday, October 5. The report is only accessible to professional and institutional clients. In the analysis, dated October 4, the investment bank and its analyst James Grzinic maintain their 'buy' recommendation for the Spanish fashion multinational's shares, as well as their price target of 67 euros per share. They also forecast that Inditex will achieve a year-over-year growth of around +9.5 percent for the third quarter of its current financial year.

In addition to these estimates, the investment bank's analyst, as reported by financial media and platforms like MarketScreener, describes Inditex's growth potential as “undervalued”. He identifies the first collection by John Galliano for Zara as a key factor that could positively contribute to the “impressive growth” they forecast for the company in the third quarter of its 2026 financial year. For this period, they estimate that Zara could generate around 100 million euros in revenue from the collection. This figure would account for approximately +1 percent of the +9.5 percent growth estimated for Inditex in the third quarter.

Capitalising on the weakening luxury industry

Looking beyond this specific period, Jefferies also highlights this first John Galliano collection for Zara as an example of Inditex's strategies. These strategies, particularly from its main fashion chain, aim to progressively elevate its positioning and brand value. As FashionUnited has noted for years, this also increases the average price of its products, specifically for Zara. This combination of elements is set to underpin the future growth of the Spanish fashion multinational. The investment bank positions the company as particularly well-placed to capitalise on the weakening luxury industry.

This is a sector, they note, that is experiencing lower consumer demand, especially from younger generations. These consumers not only have different purchasing priorities geared towards “experiences” but also a clearer perception of the declining price-quality ratio offered by certain luxury brands. These factors have opened up greater potential for Inditex's growth towards a higher-value offering, without losing its unique selling proposition as a group focused on accessible fashion. The group is successfully capitalising on this, especially following the appointment of Marta Ortega as chairperson in April 2022. They openly describe her appointment as “key”, stating it “has allowed the Spanish giant to direct its strategy to better take advantage of this changing context”. This follows the line expressed by FashionUnited last June, when we pointed directly to the position Marta Ortega has taken as practically another company asset.

With a revaluation potential of +13 percent on share price

Focusing on Inditex's stock market performance, despite these positive words and estimates, the markets have responded very coldly to what, on paper, was a masterful move by Inditex and its star chain. This is evident from the fact that, exactly one week after the launch of this first John Galliano collection for Zara, Inditex shares have accumulated a slight fall of -1.07 percent. They dropped from 53.92 euros per share at the close of trading on September 30 to 53.34 euros at the close of trading last Wednesday, October 7.

However, despite this contained fall, Inditex's shares are currently as clearly undervalued as the Spanish group's growth potential, according to the Jefferies analyst. This is considering that the consensus target price for Inditex shares is currently 60.39 euros per share. This figure suggests a revaluation potential of up to +13.22 percent for Inditex's share price; target prices estimated by analysts following the company range from 41.50 to 67 euros per share. Jefferies offers the highest estimate, projecting an upward stock market trend of up to +25.61 percent for the Spanish company.