Zara's owner, Inditex, beat expectations on Wednesday, boosting half-year net profit by 40% even as the world's biggest fast-fashion company slowed the pace of price increases.

Inditex has increased its lead over Swedish rival H&M this year thanks to faster delivery of fashion from nearby suppliers at prices that allow it to cope with inflationary pressures.

The company posted a net profit of 2.5 billion euros ($2.7 billion) for the six months to July 31, beating the market estimate of 2.38 billion euros, according to LSEG data.

However, its shares fell 1.5% in early trading in Madrid as investors booked profits after a 58% rise over the past year.

"Given the recent results, many investors are just wondering how long this strength can continue," said Bernstein analyst William Woods.

Most analysts expect Inditex's strong financial position to allow it to hold prices steady or even lower them in the face of weakening demand and lower inflation.

The flagship brand of the Zara retail chain is planning further expansion of stores in the United States, a market that two years ago became Inditex's biggest after Spain.

Inditex's sales rose 13.5% to 16.9 billion euros and gross margin reached 58.2%.

The group, which also owns Bershka, Pull & Bear and other brands, said sales in constant currencies in the period from August 1 to September 11 were 14% higher than a year ago, showing that the momentum of summer sales is continuing as the autumn collections arrive.

"I expect price growth to moderate now over the next year," said RBC analyst Richard Chamberlain, adding that the results exceeded his expectations.

With a large proportion of costs in euros, Inditex said it expects currencies to have a -3.5% impact on sales this year, worse than the -2.5% previously expected.

Growth opportunities
The company kept its outlook unchanged, saying it "continues to see strong growth opportunities" as it currently has low market share in the 213 countries where it is present.

Inditex was one of the first fashion retailers to raise prices early last year in response to a sharp rise in inflation. Its higher and more diverse pricing strategy outside its home market of Spain helped it achieve record margins.

Analysts at Bank of America and Royal Bank of Canada are betting that Inditex is better positioned than its peers to compete by offering stable prices and even cutting them next year to continue its global growth as inflation eases.

Globally, Inditex reduced its store count from 5,801 to 5,745 in the second quarter, showing how the retailer is managing to increase sales while shrinking space.

Zara has tried to attract more ambitious shoppers by associating its brand with luxury as opposed to fast fashion. Last week, it launched a collection with famed fashion photographer Steven Meisel, and supermodels including Linda Evangelista have appeared in the campaign.

Since July, Inditex has been reintroducing anti-theft devices in its stores and replacing tags with chips sewn into garments in its autumn and winter collections, the company told Reuters.

The move to a system with soft alarms aims to cut clearance times by up to 50%, although only a small number of items have them so far.