Angela Monaghan 

Flower power at Zara helps Inditex profits bloom

Flagship stores and floral fashion help net profits exceed £1bn as world’s biggest clothing retailer eyes further expansion
  
  

London-based designer Lanee Aluko in a Zara shirt
London-based designer Lanee Aluko in a Zara shirt. Floral fashion was a hit with shoppers, Inditex said. Photograph: AIecsandra Raluca Dragoi/The Guardian

Inditex, the company behind the fashion brand Zara, has said sales and profits rose in the first half of the year as it prioritised big flagship stores and online expansion.

The Spanish group, the world’s biggest clothing retailer, reported an 8% increase in net profits in the six months ending 31 July to €1.26bn (£1bn), beating analysts’ expectations. Total net sales over the period increased by 11% to €10.47bn.

Zara’s floral dresses and tops, jumpsuits and oversized sweaters were popular sellers over the period, Inditex said. Like-for-like sales, stripping out the impact of shops open for less than a year, also increased by 11%, with growth across all regions. Europe, excluding Spain, saw the strongest sales growth, at 43%.

The company said all its brands expanded internationally, with 83 shops opening in 38 countries over the first half, taking the total number of stores to 7,096. Other brands in the group include Massimo Dutti, Pull&Bear, and Bershka.

Led by Zara, Inditex has shifted its focus to opening larger stores in prime locations, including a new branch spread across five floors in the Galician city of La Coruña, close to the group’s headquarters.

It is also taking its online shops to more countries, with 11 new locations opening in the first half, mainly in eastern Europe. Zara’s automated production process allows it to quickly respond to changing trends and weather.

Richard Chamberlain, analyst at RBC Capital Markets, said the results were better than expected, driven by a strong summer performance at Zara.

“In particular we think Inditex has benefited from being able to offer a high amount of newness compared to the average apparel retailer,” he said. “[We] expect it to continue to take like-for-like share in fragmented apparel markets worldwide, on account of its strong multichannel offer and its superior ability to respond to trends in season.”

Inditex said it had created almost 10,000 jobs over the first half the year, with more than 2,400 of them in Spain.

Zara was founded by Amancio Ortega, who opened the first store in La Coruña in 1975. He is currently the world’s second richest man, with a fortune of $77.4bn (£59.6bn), according to Forbes.

 

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