“Inditex has better ability to pass on price increases as its customer base is less price-sensitive, while H&M is in more direct competition with the cheaper players like SheinBarclays

Chinese online fashion retailer Shein is set to raise around $2 billion in a new funding round this month and is aiming for a U.S. listing in the second half of this year, three people with knowledge of its plans told Reuters.
Inditex – the world’s biggest fast fashion retailer – is expected to report annual sales of 32.65 billion euros ($35 billion), exceeding pre-pandemic levels, partly thanks to an aggressive U.S. expansion, according to analysts polled by Refinitiv. Inditex’s fiscal year runs from Feb. 1 to Jan. 31.

H&M is expected to show an 11% jump in sales for the quarter, a separate Refinitiv poll of analysts shows, ahead of quarterly earnings results on March 31.

H&M has raised prices over the past quarters, but in January Chief Executive Helena Helmersson said the company had not fully passed cost increases onto shoppers and had swallowed part of it, hurting profits.
H&M, whose other brands include ArketMonkiWeekday

Half of Inditex’s suppliers are located near its headquarters in A Coruña, a port city in northwestern Spain, which the company says allows it to accelerate production times compared to rivals.

Inditex shares have outperformed H&M, which was slower in raising prices.

“Being long Inditex and short H&M has been a successful trade,” said Champ. However, he added, Inditex will face questions from analysts on Wednesday about its medium-to-long term growth plans.

Analysts predict 2023 will be a more challenging year for Inditex due in part to higher operating costs after it gave employees in its home market of Spain a 20% pay increase.

Inditex’s performance in China, which accounted for 4.7% of profit before taxes in 2021, will also be closely watched. Inditex closed 34 stores in mainland China over its 2021 fiscal year.

H&M, which has struggled in China after its concerns over alleged human rights abuses in Xinjiang led to a social media-inspired boycott by shoppers, did not provide Chinese sales figures for its 2022 fiscal year – a departure from previous years when it gave a breakdown of its top 10 markets.