Inditex (Zara) is investing in a new logistics hub in Spain
The world’s largest fashion retailer, Inditex SA, is laying bricks to support growth for the next decade by investing EUR 150 million (around USD 209 million) in a new logistics hub
The new logistics hub at Cabanillas Del Campo (scrubland just outside of Madrid, will be capable of distributing close to half a million garments daily to stores in 87 countries on five continents. It will consist of four gray warehouses and the facility will be operating within months and bring the number of Inditex distributions centres in Spain to 10.
Higher spending on distribution capacity, new stores and a makeover of older Zara stones curbed Inditex’s profits in the fourth quarter of 2013. Net profit during that quarter fell to EUR 703 million (EUR 708 million). Sales rose 4.7 % to EUR 4.8 billion. Profit margins and sales outside the Euro Zone were also dented by the strengthening of the EUR against other currencies. For all of 2013 Inditex reported a net profit of EUR 2.38 billion (EUR 2.36 billion) and annual sales rose 4.9 % to EUR 16.72 billion.
According to Chairman and CEO Pablo Isla 2013 was a year of heavy investment and job creation, a situation to continue throughout 2014.
The Spanish retailer relies on these distribution hubs to distribute its garments worldwide. They are a key element in a sophisticated production chain, allowing the company to take new designs from the drawing board to the consumer in as little as two weeks, the fastest in the industry.
Inditex is spending EUR 500 million on a logistics upgrade, including the Cabanillas hub, betting that fast fashion has a long runway into the future, particularly as European consumers recover from the longest slump since World War II. Inditex will also keep opening an average of more than a store a day for years to come.
The Cabanillas hub will receive clothes from suppliers, sort them and send them out to stores around the world twice a week. As of January 31, 2014 Inditex had 6340 (6009) stores worldwide and more than twice as many as in 2007. The company actually plans to open as many as 500 new stores throughout 2014 and it will close roughly 100 smaller ones.
The retailer is investing increasingly in larger stores. This year it plans to open new flagship stores in Los Angeles, Miami (both USA), one in New York’s financial district (all USA) and Hong Kong. The expansion will reach 27 countries, with openings planned in South Korea and Mexico.
Over the past six weeks Inditex’s sales grew 12 & in constant currencies.