Brilliant results for Spanish Inditex (Zara)

Brilliant results for Spanish Inditex (Zara)

The Spanish retail market is still very important for Spanish Inditex clothing chain operating worldwide, whereas Spanish retail sales fell 4 % in March and 10 % in April Inditex’s sales of the first quarter 2012 were up 15 % to EUR 3,42 billion (around USD 3.75 billion) and sales of same stores were up 6 % and profit totalled EUR 432 million (around USD 540.2 million) or 30 % more than in the first quarter of 2011

European markets represent for Inditex (owner of Zara brand) a sales share of 45 % and again in the first quarter of 2012 the Asian business helped with a strong performance but even cash-strapped European consumers afford Zara fashions because an average garment cost only EUR 17. Inditex sources still more than 50 % of its clothes from Spain, Portugal, Morocco and Turkey.

The company plans to open one new store a day this year especially overseas and this will help to further strengthen earnings by 13 % annually to 2016. Totally Inditex operated on April 30, 2012 5618 stores in 84 countries and it opened in the first three months 464 new stores. The gross margin rose from 58.8 % to 60.2 %.

Meanwhile the owner of Inditex (founded in 1975), Amancia Ortega Gaona (76) became the worthiest individual in Europe with a fortune of more than EUR 30 billion. The company’s advantage is that its fashion appeals as well to the 16 year old apprentice to the 65 year old spouse of an industrialist. The stores are representative of the gloss of luxury and the Inditex has complete control of its products, a fact permitting to quickly realise and manufacture new trends unmatched in the shortest possible time and transfer the merchandise to its stores.

The fashion offered by Zara is meeting Asian measures more than American sizes but Zara opened its largest US location in March on Fifth Avenue in Manhattan, New York not only as a showcase for Americans but also for tourists from abroad and mainly from Asia. The site should demonstrate how hype Spanish Zara fashion is really. The CEO of Inditex, Pablo Isla states that the going to China (today with 250 shops) is like to start all over and Inditex had to adapt its business model accordingly and will manufacture there in the future to enforce the margin. The company has other brands than Zara, namely Pull & Bear (created 1991), Massimo Dutti, Bershka and Oysho (underwear chain since 2001) and also specialised accessoires and bag shops under the name of Uterqüe and it created lately also Zara Home.

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