Sales and profits surge at Zara owner Inditex

Inditex, the Spanish group which owns fashion retailers including Zara and Massimo Dutti, revealed revenue jumped 13.5% year-on-year to €16.9bn (£14.6bn) for the first half, boosted by strong sales of summer clothing.

Gross profit for the six months, between 1 February and 31 July, rose 14.1% to €9.8bn (£8.5bn), compared to the same period last year and EBITDA increased 15.7% to €4.7bn (£4bn).

Net income grew 40.1% to €2.5bn (£2.15), with “strong cash flow generation” according to the group. And its net cash position increased 14.1% to €10.5bn (£9.03bn), compared to the same period last year.

For its flagship brand, Zara, the world’s largest apparel retailer revealed that sales lifted  13.1% year-on-year to €12.3bn (£10.6bn). Zara, which sells both mens and womens fashion, as well as homeware, makes up 73% of Inditex’s total revenue.

“The 1H2023 results demonstrate that the talent of our teams continues to consolidate the improvements in the performance of our business model.

“The ongoing commitment to creativity, quality and customer experience, as well as the determined progress in sustainability, drives a strategy that is taking our business to the next level.”

Inditex CEO, Oscar Garcia Maceiras

Marta Ortega, daughter of founder Amancio Ortega, took the helm of the company in November 2021 as chairwoman. But despite claims of nepotism at the time, the business has gone from strength to strength under her leadership. She had previously been heading up the creative team at Zara.

For the second half of the year, Inditex said Autumn/Winter collections have been well received by customers. Whilst store and online sales in constant currency between 1 August and 11 September 2023 have increased 14% compared to the same period last year.

OUTLOOK

Inditex says it continues to see strong growth opportunities, with its key priorities to:

• Improve the fashion proposition
• Enhance the customer experience
• Increase its focus on sustainability
• Preserve the talent and commitment of its people

The group said it is also developing “several initiatives in all key areas” for the coming years to help meet these objectives. “The creativity of our teams and the flexibility of the business model in conjunction with in season proximity sourcing allows a swift reaction to customer demand” the retailer said in a market update.

Inditex operates in 213 markets, and it said it expects to see “increased sales productivity” in its stores going forward.

NEW LOOK STORES

Zara has been opening new stores with a fresh look, most notably its brand new space on the Champs Elysée in Paris, as well as other major cities such as Madrid and London. With a minimalist, paired back feel and barely any inventory on the shop floor, it looks more high end than high street and taps into the wider trend for mainstream fashion brands behaving more like luxury brands.

We’ve seen the likes of Primark tap into this trend by offering luxurious in-store experiences such as nail bars, blow dry bars and custom t-shirt printing. 

And H&M’s new store in Berlin is another great example of this. With a big focus on rental and resale, not much product, beautiful storytelling around the products, considered visual merchandising and the most extraordinary café, it would give Dior a run for its money in the luxury stakes.

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