Inditex sales and profits rise again in Q1, expands online ops

By

Sandra Halliday

Published
Jun 12, 2019

Inditex  is another of the big winners in global fashion retail and while its sales and profits increases may not always match analysts’ lofty expectations, it's a consistent performer as it continues to expand globally.

On Wednesday, the Spanish giant reported Q1 net sales that rose 5% and reached a record €5.93 billion. Net profit was 10% higher than a year ago at €734 million and the company’s net cash position rose 9% to €6.66 billion.

The company said that in-store and online sales increased by 9.5% in local currencies between May 1 and June 7. From February 1 until June 7 sales increased 6.5% in local currencies, “underpinned by sales growth in all geographies and at every brand.”

Profitability continued to grow too, with the gross margin widening 61 basis points to 59.5%. The company added that Q1 reflected the first-time application of IFRS 16. Excluding the effect of IFRS on leases from February 1, EBITDA grew 9%, EBIT 7% and net profit 7%. 

Chairman and CEO, Pablo Isla, said the figures demonstrate “the solidity of the company’s model.”  And he added a note about the “strong momentum in the digital transformation of the integrated store and online sales platform and in sustainability as a key pillar of the company’s strategy”. 

Online clearly is a key focus for the company as it announced the launch of new online markets. In addition to going live with its Zara webstore in Brazil during the first three months of the fiscal year, the group has just opened its online platform in Morocco, Egypt, Lebanon, Israel, Serbia, Indonesia, the United Arab Emirates and Saudi Arabia. And Massimo Dutti, Pull&Bear, Stradivarius, Zara Home, Oysho and Uterqüe have more than 100 new markets where customers can now buy their collections online. 

There’s more planned for the autumn season as well with Zara set to launch online sales in South Africa, Qatar, Kuwait, Bahrain, Oman, Jordan, Colombia, the Philippines and Ukraine. 

During the quarter, the company also continued to add creative initiatives as part of its commercial and marketing push for its brands with projects such as the bicentennial celebrations at the Prado Museum in Madrid where Zara Man created a special collection called ‘Becoming a work of art’, featuring clothing inspired by some of the gallery’s most famous works of art. 

Zara also launched its second exclusive and limited Zara SRPLS edition and, in May, announced a new collaboration with the Chelsea College of Arts for a new unique collection designed by students under the scope of the Zara VIEW.S initiative.

Zara also featured, along with Zara Home, Oysho and Massimo Dutti, at the Milan Furniture Fair, and Pull&Bear put the first range of clothes from the Primavera Sound Pull&Bear capsule collection on sale on both the brand’s app and website and in select stores. This is a sustainable collection which combines fashion and music and takes its inspiration from international streetwear and urban culture.