Zara profits hit 10-year high under new management
ZARA owner Inditex’s profits have hit a 10-year high in its first set of results under the daughter of its billionaire founder.
The Spanish fashion empire, which also owns Massimo Dutti, said sales rocketed 36pc to €6.7bn (£5.7bn) for the three months to April thanks to a “significant rebound in traffic” as shoppers returned to the high street despite rising prices.
The sales rush helped send its pre-tax profits up 82pc on a year ago to €990m. The company added that since April, its spring and summer collections had been “very well received”, with sales up 17pc in the month to June.
The figures will come as a boost to 38-year-old Marta Ortega, who became the chairman and public face of the company in April, an appointment Inditex said completed a “generational handover process” that began in 2011 when its founder Amancio Ortega stepped down.
Ms Ortega has worked at the retail empire for over 15 years, starting out on the shop floor at the parent company’s high street brand Bershka.
Her father founded Inditex in 1975 when he opened its first shop with his ex-wife, Rosalía, and is now one of the world’s richest men, with an estimated net worth of $50bn (£40bn).
Inditex surprised investors late last year by announcing Ms Ortega’s appointment as well as the immediate replacement of chief executive Carlos Crespo with the company’s most senior lawyer, Oscar Garcia Maceiras.
Although the latest numbers are a boost for Inditex’s new leadership, online sales fell 6pc in its first quarter while store closures in Russia and Ukraine cost it a one-off €216m.
Analysts at UBS have estimated that Zara’s prices are at least 10pc higher than last year’s levels, although Mr Maceiras told analysts the company does not plan any more significant changes to pricing, reported Bloomberg.
The company utilises shorter supply chains than many of its competitors, giving it an edge amid recent issues across global freight markets.
According to estimates by Royal Bank of Canada, about 15pc of Inditex goods are sourced from China, where lockdowns have caused disruption, compared with 35pc for Swedish rival H&M and 50pc for UK high street retailer Primark.
Inditex expanded its inventory by 27pc during the quarter, which the company said had helped it weather widespread supply disruptions, although the build-up was not as marked as peers such as Gap and Abercrombie & Fitch.