Inditex achieves record margins in inflationary times

Price increases have enabled Inditex to achieve record margins this year. Inflation is not stopping consumers, as the fast-fashion giant continues to outpace the competition.

Even faster

The parent company of chains like Zara has seen its sales rise by 13.5 % to 16.9 billion euros over the last six months. Even more eye-catching is the profit margin, reaching a record 58.2 %. The company posted a net profit of 2.5 billion euros for the six months to 31 July, beating market forecasts, Reuters reports. The world’s largest fashion group saw its profits rise by 40 %.

Inditex was one of the first to raise prices at the start of the inflation wave, but is managing to pull it off surprisingly well. The company manages to move even faster, as it now produces closer to home in order to introduce new trends more quickly and stay ahead of cost increases. The group now has a head start, which could even lead to lowering prices in the near future.

Much to conquer

In August, sales still rose by 14 %, indicating that the autumn collections are being well received, despite this summer’s capricious weather. Much of the growth is coming from abroad: although the group has closed more than sixty shops worldwide, the Zara subsidiary is planning to open more shops in the United States – already its second largest market after Spain. Inditex also believes that it is possible to gain market share in hundreds of other countries.

In all this, Zara is positioning itself as a more luxurious brand, at a time when fast-fashion has come in for some criticism. Last week, the brand launched a new collection with renowned fashion photographer Steven Meisel, featuring top models such as Linda Evangelista.