Inditex surprises with strong results

Spanish fashion giant Inditex (Zara, Bershka, Massimo Dutti) has increased its sales figures by 5 % in the past quarter, clearly bucking the trend of struggling clothing stores.

Turnover on the rise again

Despite a difficult start to 2019, with uncommonly low temperatures in Southern Europe, Inditex managed to find its footing again: in the quarter from February to April, turnover increased by 5 %, reaching 5.93 billion euros. Net profits ended at 734 million euros.

In the past six weeks, turnover even increased by 9.5 % (excluding currency effects). On a comparable basis, the biggest fashion group in the world managed to generate 6.5 % turnover growth in that month and a half, according to RBC Capital Markets analysts in Reuters. In the first quarter, that figure was only 2 %.

Advantageous currency effects

For the full financial year, Inditex is sticking with its prediction of 4 to 6 % turnover growth on a comparable basis. Of course, the group will be helped this year by positive currency effects. After two years of negative effects, the gross margin is finally rising again, reaching 59.5 %, which is 6 percentile points higher than the year before.

Although it remains to be seen whether Inditex will still be doing this well without currency effects, these performances provide a sharp contrast to the negative climate in the fashion industry. Retailers in Europe and beyond are suffering under the weight of online competition and critical consumers who are both looking for ethical products on the one hand, and bargains on the other. In the United States alone, Gap, Topshop and Forever 21 have already taken up restructurings.