Inditex, the owner of Zara, reported weaker-than-expected second-quarter profit as disruptions linked to the Middle East conflict raised transport and input costs. Its shares fell 3% despite a strong start to autumn trading, with currency-adjusted sales rising 9% from August 1 to September 7. Sales reached €11 billion in the May-to-July quarter, while gross margin came in at 56.7%, slightly below analysts’ expectations. The group said the conflict was affecting Middle East sales, although conditions had improved from the first quarter; about 480 stores in the region are operated by franchisees. Inditex said its autumn/winter collections were very well received despite record heat in Western Europe and a slowdown reported by some U.S. retail peers. It added €200 million to planned capital expenditure, bringing this year’s total to €2.5 billion, as it upgrades offices, stores and logistics. The company is also expanding its lower-priced Lefties brand into Britain and plans to enter Germany next year. Inditex’s store network stood at 5,444 locations at the end of July, down from 7,490 in January 2019, as it prioritizes larger flagship stores and closes peripheral sites.