Zara owner Inditex said on Wednesday its net income for 2023 rose by 30 percent to 5.4 billion euros ($5.9 billion) as the fast-fashion giant bet on upmarket shoppers and offered more competitive prices than rivals such as H&M.

The company’s profit for the fiscal year ending in January was in line with analyst expectations in an LSEG poll.

Inditex widened its lead over H&M during 2023 thanks to its ability to deliver fashion trends faster from nearby suppliers and sell more clothes at higher prices to upmarket shoppers. That has helped insulate it from the rapid growth of Chinese-founded rival Shein.

In-store and online sales grew 10 percent and reached a record 35.9 billion euros between February 2023 and January 2024.

Inditex results were in line with LSEG-provided analyst expectations, but its sales are growing at a slower rate than
the 17.5 percent rise reported last year as the pace of price increases has moderated year-on-year.

Zara, its core brand, began to raise prices earlier than H&M in response to surging inflation and as part of a shift to offer special pieces to a more high-fashion market, while other of the company brands grow in its budget range.

But over two years, Zara has increased average prices of its assortment season over season less than H&M and other competitors, according to retail intelligence company EDITED.

The average price of apparel in stock at Zara for the Spring 2024 collection in the US market is 11 percent higher than two years ago, while stocks at H&M and Mango are both above 20 percent versus 2022, said Krista Corrigan, a Retail Analyst at EDITED.

Investors expect the company to continue to outperform its arch rival H&M. Its share price trades at 21.8 times expected earnings for the next twelve months while H&M’s price-to-earnings ratio is 16.1.

“Inditex achieved the most difficult thing, which was being able to grow while passing on inflation in 2023. It did it because it has a better value proposition than competitors like H&M,” said José Ramon Iturriaga, fund manager at Abante Advisors, which holds Inditex shares. “I don’t think this year will be more any more difficult for Inditex,” he added.