Inditex Powers Ahead With Global Expansion, as Sales and Earnings Rise

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photo credit: Inditex Group

The Inditex juggernaut continued in the first six months of its fiscal year, with solid sales and earnings gains, and aggressive expansion.

In a Nutshell: All of the Inditex Group’s brands expanded their international footprints in the first half, adding stores in 35 countries. This brought the group´s global store count to 7,405, 113 more than at the start of the year. Following the introduction of seven of the group’s retail concepts in Belarus in August, and with the zara.com platform scheduled to launch in India on Oct. 4, Inditex is now operating in 94 markets, 46 of which have an online presence.

The company continued to invest in areas related to its growth strategy during the period, opening, refurbishing and renovating stores, as well as continuously upgrading and modernizing its facilities and logistics platforms. Capital expenditure for the full year is estimated at 1.5 billion euros ($1.8 billion).

Inditex continued to roll out its used clothing collection program in collaboration with a number of international NGOs. This program is already fully operational in 532 stores in seven countries–Spain, Portugal, the U.K., Ireland, the Netherlands, Denmark and China. Planning is in progress for implementation of the scheme in another 25 countries, with pilot tests underway in some of Sweden and Austria.

[Read more about Zara: Your Supply Chain Isn’t as Fast as Zara’s—But it Could be]

Sales: Inditex Group revenue rose 11.5% to 11.7 billion euros ($14.03 billion) in the first half ended July 31 from 10.47 billion euros ($12.46 billion) a year earlier, girded by growth across all markets and brands. The Zara chain saw an 11 percent sales increase in the half compared to a year earlier to reach 7.74 billion euros ($9.26 billion). Sales in home country Spain rose 16 percent year-over-year, while the rest of Europe increased 43 percent, with U.S. revenue rising 16 percent, and Asia and the rest of the world rising 25 percent.

Earnings: Net profit in the first half grew 9 percent to 1.37 billion euros ($1.64 billion). Earnings before interest, taxes, depreciation and amortization also increased 9 percent to 2.3 billion euros ($2.76 billion).

CEO’s Take: Pablo Isla, chairman and chief executive officer, stressed the “strength and sustainability of the company’s integrated offline-online store model, which year after year continues to demonstrate its ability to deliver growth, while emphasizing the creation of value for society and the environment, as evidenced by the notable creation of jobs, particularly in Spain, thanks to the headquarters effect.”

The company created 11,043 new positions in the last 12 months. Of these, 2,933 jobs are located in Spain, resulting from growing teams at its headquarters.

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