Inditex still riding high in H1 as omnichannel investment pays off
Inditex has seemed unstoppable for years and its latest results, released on Wednesday didn't hint that the situation is likely to change any time soon. The Spanish fashion retail giant reported first half sales growth of 7% and said it set new records for revenues and profits.
Importantly, like-for-like sales growth hit 5% in the first half (the six months to the end of July) and was “positive across all brands and geographies, in stores and online.”
And the good performance seems to have continued. Stores and e-sales in local currencies increased 8% between August 1 and September 8. Management expects like-for-like sales growth of between 4% and 6% for the year as a whole.
Executive Chairman Pablo Isla credited the “relevance of the investments we have made in the stores as well as in logistics and technology, all of which have been key elements in the development of our customer-focused integrated store and online platform”.
So let's look at the H1 figures. Net sales rose by that 7% to top €12.82 billion for the first time, and net profit rose 10% to “hit a new milestone” of €1.55 billion. It would have been up 7% without the impact of new accounting standards. Meanwhile, EBITDA was up 47% to €3.447 billion.
Despite this being the age of the internet and many firms switching their focus to digital, the company said the cornerstone of its growth strategy “is the addition of new sales space of the highest standard”. Not that digital is being neglected and the company continued its development of the online business. Importantly, it’s making both channels work together. Its newest stores feature “cutting-edge technology in order to facilitate integration with Inditex’s ever-increasing e-commerce and also in line with the eco-efficient store programme, already in place in most of the brands’ stores.”
Developments in H1 included zara.com introducing its online platform in Brazil, the UAE, Lebanon, Egypt, Morocco, Indonesia, Serbia and Israel. After the close, in August, Zara online also launched in Qatar, Kuwait, Jordan, Bahrain and Oman. And it’s due to launch the platform soon in South Africa (September 18), the Ukraine, Colombia and the Philippines (in Q3).
NEW STORE SPACE
Store-wise, at the July close, the group had 7,420 stores in 96 markets so it’s clear that Inditex is about so much more than its most famous brand, Zara.
All of its formats had high-profile openings across 31 different markets during the half, complementing the refurbishment and expansion of over 100 existing stores. And as well as the raft of openings, the firm is continuing to add new space. Tomorrow, for instance, Zara will open its expanded store in Dubai Mall, the largest single-storey Zara store in the world, with a floor space of over 5,000 square metres. And the brand’s store on Calle Preciados, one of the busiest shopping streets in Madrid, will reopen with a floor space of over 4,000 square metres across six floors, in which Zara “will unveil its latest image and newest customer experience-enhancing technology.”
As well as store openings, the company has also launched product initiatives such as Zara’s TRFXJoin Life, which is a recycled, on-trend, denim clothing collection. It’s the brand’s first post-consumer denim offer.
And Massimo Dutti staged a See Now, Buy Now catwalk show in Barcelona last Friday that was broadcast live over the brand’s social media channels. Meanwhile Pull&Bear, which opened its first store in Luxembourg and opened a high-profile store on Rue d’Antibes in Cannes, extended its collaboration with Rosalía, with a new line inspired by the singer’s personal look.
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