Zara posts record profit despite growth slowdown

Spanish fashion group Inditex had another strong quarter despite the warm autumn weather: sales growth did slow down a little, but profit figures impressed.

Challenges

Inditex, the parent company of Zara, Massimo Dutti, Pull & Bear and Bershka, managed to raise its sales by 11% to 25.6 billion euros in the first nine months of this year. Net profit grew by a third from 3.1 billion to 4.1 billion euros. Admittedly, sales growth in the third quarter was only 6.6 %, slightly below expectations. However, sales are picking up again: between 1 November and 11 December, sales rose by 14 %. As a result, the retailer says it is satisfied with the results so far this year.

With these figures, Inditex is doing better than most industry peers – despite some challenges, such as the warm autumn weather in Europe and the recent controversy surrounding a Zara advertising campaign featuring mannequins wrapped in white cloths – an image that reminded some consumers of the images of dead bodies in Gaza.

Second-hand

Inditex is investing in fewer but bigger physical shops, online and logistics to get new collections into shops and to customers faster. This is also necessary as fast-fashion players are increasingly challenged by new entrants such as Chinese fashion app Shein, which is flooding the Western market with bargain-priced fashion items of sometimes dubious quality.

Recently, subsidiary chain Zara expanded its second-hand service Pre-Owned to fourteen additional European countries. On the platform, consumers can sell clothes, donate them or have them repaired. In the Benelux, the service launched on 12 December.