Zara excels, H&M stagnates, GAP crashes | RetailDetail

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


Ahold Delhaize launches digital lab in the United States

22/05/2018

Ahold Delhaize’s American division will found a new company focused on digital innovation: Peapod Digital Labs will become a lab for new digital, eCommerce and personalization strategies. 

Carrefour forced to shut down hundreds of Dia stores

22/05/2018

Carrefour has not found a buyer for hundreds of its former Dia stores in France yet. That may force nearly 230 stores to shut down.

Carrefour and Tencent launch high-tech store in Shanghai

22/05/2018

The recently launched ‘Le Marché’ store formula, a first collaboration between Carrefour and Tencent, allows customers to pay with face recognition at unmanned checkouts.

Hoegaarden moves part of production to Vietnam and China

18/05/2018

Hoegaarden experiences strong growth in Asia, but is losing ground in Europe. That is why AB InBev will move part of the production to China and Vietnam: the brewery in Hoegaarden will lower cut its production days by 2 a week.

Holland & Barrett wants vegan stores

17/05/2018

British health chain Holland & Barrett (previously known in the Benelux as Essenza) plans to open completely vegan stores, a trend the chain needs to follow according to CEO Peter Aldis.

Nestlé on a diet: cuts back sugar, fat and salt levels

17/05/2018

Nestlé wants to lower its sugar, salt and fat levels to play into the global demand for healthier food.