Zara owner prepares for winter supply chain chaos

INDITEX, the world’s largest fashion retailer and owner of Zara, is preparing to ramp up manufacturing and stockpile clothing amid fears that supply chain chaos will trigger shortages this winter.

The company, which also owns Massimo Dutti and Pull & Bear, said it has increased production of its autumn and winter ranges “in the face of possible supply chain tensions”.

The Spanish retailer said the value of its inventory at the end of July was €3.6bn (£3.1bn), around 43pc higher than the same time last year.

Inditex’s flexible supply chain structure means it is able to get fashion trends from the catwalk into its high street shops within weeks. The retailer sends new designs to stores every two weeks on average. Its competitors traditionally change theirs every two or three months.

This has made the retailer largely immune to some of the supply chain disruption its rivals have experienced in recent years owing to the pandemic.

But yesterday, chief executive Oscar García said “increasing inventory at the beginning of the season is something you are hearing widely from other market participants”, adding that Inditex was no exception.

Mr García told analysts that the “temporary” move to stockpile goods only applied to basic items such as underwear or T-shirts that are made in Asia. A spokesman said the decision “isn’t a change to the business model”.

About 60pc of Inditex’s clothing is made in Spain, Portugal, Turkey and Morocco, which can be transported to shops swiftly.

Inditex yesterday posted a 24.5pc rise in sales to €14.8bn in the six months to the end of July and a 42pc increase in pre-tax profit to €2.3bn, partly because of an increase in its prices. Shares in Inditex rose as much as 6pc to €23.25.