Inditex, the fashion group behind Zara and Bershka, is investing in stock to get through what may be a tough winter. The Spanish fashion giant is increasing production and stockpiling extra supplies after a strong spring.
40 % more supplies
Inditex is anxious about the coming winter, fearing problems in the supply chain, even higher raw material and production costs and a price-critical consumer. Therefore, the fast-fashion giant is accelerating production to proactively stock up. The Zara owner already values its stocks at 3.67 billion euros, 43 % more than last year.
Nevertheless, the first half of this year went well for the fashion giant: in the six months of the financial year (ending in July), sales rose 24.5 % to 14.8 billion euros. Net profit even clocked up 41 % higher at 1.8 billion euro. For the second half, however, the group is counting on some slowdown: between 1 August and 11 September, sales growth slowed to 11 % in constant currency, even though sales have been rising again in recent weeks.
Strategic price hikes
Inditex raised prices early in the year to cope with inflation, but benefited: at the time, people around the world were buying more clothes for holidays, events and getting back to the office after the corona cuts. Gross margin was 57.9 % in the first half of the year.
Amancio Ortega, the retired founder of Inditex, is already responding to the supply crisis in his own way: the billionaire is buying up warehouses in the United States. Talks are currently ongoing for 905 million dollars worth of logistics real estate, with tenants such as Amazon and FedEx.