Zara excels, H&M stagnates, GAP crashes

Zara can cope with the rising cotton and oil prices better than H&M and Gap can. While Gap has released a profit warning and H&M only achieved a minimal (2%) growth, the Spanish brand saw its owner Inditex grow a huge 11% over the past quarter.

 

Inditex leads the way in 2011

The main victim of the ever rising raw material prices is American GAP, whose profit warning last week predicted a drop in profits of 22% this year. Swedish H&M's turnover did grow by 2%, but that was not enough to match the predicted 5.4%.

 

With 27.6 billion Swedish crowns (3.03 billion euro), H&M's monthly turnover was 80 million euro shy of what the analysts had estimated. The news from Spain is significantly better: Inditex's net result for this financial quarter reached 332 million euro (well better than expected), while their turnover soared to 2.96 billion euro (+11%).

 

Higher costs, higher salaries: lower margins

Inditex too suffered from the rising costs and saw its bruto margin drop from 59.9 to 58.8%, but the situation for the two others is far worse. Especially the rising salaries in China are causing these bad results – while Inditex produces mainly in Europe and Northern Africa, where salaries have grown less than in China.

Another factor is threatening all three chains: the European and American consumer, hit hard by the global crisis and inflation, is spending less – and this reinforces the influence of higher prices for raw materials and energy. Again, the Spanish empire, who have just announced the opening of a Zara web shop for America, is better off: it has a strong presence in markets like Eastern Europe, that are still growing fast.

 

Zara can cope with the rising cotton and oil prices better than H&M and Gap can. While Gap has released a profit warning and H&M only achieved a minimal (2%) growth, the Spanish brand saw its owner Inditex grow a huge 11% over the past quarter.

 

Inditex leads the way in 2011

The main victim of the ever rising raw material prices is American GAP, whose profit warning last week predicted a drop in profits of 22% this year. Swedish H&M's turnover did grow by 2%, but that was not enough to match the predicted 5.4%.

 

With 27.6 billion Swedish crowns (3.03 billion euro), H&M's monthly turnover was 80 million euro shy of what the analysts had estimated. The news from Spain is significantly better: Inditex's net result for this financial quarter reached 332 million euro (well better than expected), while their turnover soared to 2.96 billion euro (+11%).

 

Higher costs, higher salaries: lower margins

Inditex too suffered from the rising costs and saw its bruto margin drop from 59.9 to 58.8%, but the situation for the two others is far worse. Especially the rising salaries in China are causing these bad results – while Inditex produces mainly in Europe and Northern Africa, where salaries have grown less than in China.

Another factor is threatening all three chains: the European and American consumer, hit hard by the global crisis and inflation, is spending less – and this reinforces the influence of higher prices for raw materials and energy. Again, the Spanish empire, who have just announced the opening of a Zara web shop for America, is better off: it has a strong presence in markets like Eastern Europe, that are still growing fast.

 

Questions or comments? Please feel free to contact the editors


Lucas Bols drunk in love with Passoã

16/11/2017

Liquor manufacturer Lucas Bols’ turnover has grown 23.8 % in the first six months of its broken fiscal year, to 48.8 million euro. Aside from 0.5 %, the entire growth is thanks to liquor brand Passoã’s integration.

"Hunkemöller prepares IPO"

16/11/2017

According to financial press agency Bloomberg, investment company Carlyle Group ordered Rothschild bankers to prepare an IPO for Hunkemöller.

Italian Food-focused theme park opens in Bologna

16/11/2017

Fans of Italian cuisine have to head to Italian Bologna, where Eataly World opened, a theme park focused on Italian pasta, wine, pizza and more.

CEO Bernard Deryckere will leave Alpro

16/11/2017

Bernard Deryckere, who was the man behind Belgian dairy company Alpro’s international success, will leave the company after sixteen years. Apparently, he will leave because of differences of opinion with its new owner, Danone.

Ahold USA trials robot in Giant Food Store

15/11/2017

Ahold USA is currently trialing a robot in a Giant Food Store. Its job is to detect dangers and then ask for assistance. He can also point out empty shelves and check prices.

India is promised land for Belgian apples and pears

14/11/2017

India is turning into the promised land for Belgian fruit farmers. It is already Belgian apples’ most important non-European market and Belgian pears are also promoted throughout the country.

Back to top