Inditex profit growth lowest in years

Inditex profit growth lowest in years

Spanish fashion group Inditex has realized a 5% turnover increase last fiscal year, to 16.72 billion euro. Lower gross margins however meant net profit only rose 1 % to 2.38 billion euro, mostly because Zara was under tremendous pressure.

Zara is still important, but barely grows

The turnover increase was entirely because emerging countries managed higher turnover, although 331 new stores also contributed to the bottom line: like-for-like turnover growth was a mere 3 % (half of the 6 % it managed the year before). In total, Inditex has 6,340 stores in 87 countries.

 

Inditex's most important brand, Zara, managed a 2 % turnover increase to 10.8 billion euro, while Bershka grew 5 % (to 1.6 billion euro), Pull&Bear 10 % (to 1.2 billion euro) and Massimo Dutti 14 % (to 1.3 billion euro).

  

Other brands also performed well, with Stradivarius up 5 % (to 1.006 billion euro), Zara Home up 24 % (to 451 million euro) and Oysho up 12 % (to 353 million euro). Uterqüe was the only one that did not manage to grow, with a 4 % drop to 71 million euro.

 

500 new stores in 2014 

Inditex expects to open 450 to 500 new stores this year and will also start selling Zara online in Mexico and South Korea, which means it will now cater 27 markets with a web shop.

 

Further expansion should relief the pressure on the Spanish home market, which still houses a third of all stores, but despite that large distribution network, the Spanish impact on the group's total turnover has diminished in the last fiscal year, from 20.7 to 19.7 %. On the other hand, the Asian impact grew from 19.7 to 20.4 %.

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