Three big tests for Zara’s new boss
Shares in Inditex, the Spanish owner of fashion chain Zara, fell as it missed its targets for the past year despite a “surge in sales”, says Henry SakerClark in The Independent. The final quarter of the year was “weighed down by the rapid spread of the Omicron coronavirus variant”, which meant many of the stores that had reopened were forced to close again. And while sales in February bounced back, the war in Ukraine has “cast a cloud” on the firm’s outlook for the current year”.
Most obviously, the Russian invasion means that Marta Ortega will start her job as chair of the business her father built with the unenviable task of managing without Russia, Inditex’s second-largest market in terms of stores, say Macarena Munoz Montijano and Rodrigo Orihuela on Bloomberg. The firm has temporarily closed its 502 stores in the country removing it from a market that Pablo Isla, her predecessor, had placed a “special emphasis” on.
Those closure will certainly cause the group a bit of shortterm pain, but investors shouldn’t overstate their importance, says Lex in the Financial Times. Inditex’s exposure to both Russia and Ukraine is relatively small: the two countries accounted for “just one-sixth of sales growth at the beginning of the 2022 financial year”. The group “is becoming more international”, with the United States now its the largest market. Other challenges ,such as inflation in input costs “from labour to freight to energy”, are set to be much more important, as are supply-chain driven shortages and delays “at odds with the whole concept of fast fashion”.