Inditex posts higher profit on Zara sales

With the release of its Q3 figures, the world’s largest clothing retailer posted an 11 per cent rise in net sales to €16.4bn compared with the same period last year.

Net profit was 9 per cent higher at €2.2bn (£1.8bn). Sales have also risen since November despite unseasonably warm weather and the company continues to focus on ecommerce growth to maintain its margins.

Inditex, which also owns Bershka and Pull & Bear, said sales had risen both in store and online. Zara accounts for two thirds of its sales.
The retailer also opened 227 new outlets and created 9,000 jobs – a fifth of which were in Spain, where unemployment remains about 20 per cent.
Inditex has continued to grow by quickly reacting to changing trends and weather, said analysts. Its items are designed, made and shipped to stores often in less than a month, which boosts its profitability.

This gives the company an edge that it then exploits with state-of-the-art logistics: an unusually centralized distribution model; automated stock-checking; systems that allow consumers to buy online for in-store delivery or buy in-store for home delivery. A focus on flagship stores rather than comprehensive geographic coverage must also help as ecommerce spreads.

Few other major clothing retailers can match the percentage sales growth that Inditex has achieved in difficult global markets this year. According to Macquarie analysts, Inditex has only a 2 per cent share of a “highly fragmented” global market and they expect it to continue rising in emerging markets and the United States.