Inditex owes profit growth to increased online sales

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Inditex, the holding company of Zara, Massimo Dutti and Pull&Bear, has seen both its turnover and profit rise in 2018, as online sales went up and investments in technology were fruitful.

 

Strong euro holds profit down

Inditex Group's full year turnover (from 1 February 2018 to 31 January 2019) went up 3 % to 26.14 billion euro, a growth that would have been 7 % excluding the adverse effects of a stronger euro. On a comparable basis, turnover went up 4 %. All regions and all brands saw a positive evolution, a press release states. Profit went up 2 % (but that would have been six times as much excluding exchange rate fluctuations).

 

The lion's share of the growth came courtesy of e-commerce, whose turnover went up 27 % to 3.2 billion euro. In markets where the group is active both online and offline, the average share of online sales has climbed to 14 %. 2018 was an important year for Inditex' online business, as it launched in 108 new markets to reach a total of 202.

 

CEO Pablo Isla believes the strong results are a reward for the clear strategy with which the group wants to offer its customers an integrated fashion platform, both online and offline. As the retailer expands its store network with a clear focus on prime locations and invests in logistics and technology, the CEO believes he has the best tools available to offer his customers the best possible shopping experience.

 

Larger stores end separate 'Home' 

There is a 39 % increase in store surface of new stores compared to those opened five years ago, an increase that is even + 50 % at Zara. Next year is an important year in Inditex' ambitions: it should see all stores of the group having reached eco-efficiency and all brands of the group should be available really everywhere on Earth.

 

In the margin of these results, Zara also announced that it will stop Zara Home as an independent concept: the choice for larger Zara stores makes it possible to include a Home corner in regular Zara stores. 'Home' will be integrated in Zara's structure as its fourth pillar. Moreover, the chain is to start a test with free customisation of jeans in three European stores, including, Amsterdam.