PARIS – With global headwinds rocking retail, Zara parent company Inditex has continued to see steady sales as it elevates its flagship brand and ups its high-street game.
The group’s sales were up 8.4 percent in constant currency in the third quarter to 9.8 billion euros.
The strong results beat analysts expectations, which had anticipated sales growth at between 7 and 8 percent at constant currency.
“Inditex has executed well in recent years, benefitting from its strong design/buy set up and quick response business model,” RBC analyst Richard Chamberlain said in a note following the release.
Gross profit for the three months to Oct. 31 rose 6.2 percent to 6.1 billion euros, and the gross margin increased by 79 points to 62.2 percent. That puts Inditex in a strong position at a time when many other retailers are squeezed and seeing margins shrink.
On the flip side, operating expenses were up just 3 percent, showing that the company has implemented tight cost controls and is working efficiently across its diversified supply chain.
Looking ahead at the holiday season, the company reported that early fourth quarter sales were booming, jumping 10.6 percent at constant currency in the month of November, driven by the fall collections.
In October, the company inaugurated a 2.1 million-square-foot Zara design and operations hub in its hometown of Arteixo, Spain, and continues to invest in the rollout of soft-tag RFID technology to improve stock accuracy and facilitate speedy self-checkout for customers.
The company ended the third quarter with 11.3 billion cash on hand, and continues to invest in its logistics upgrades, including its new distribution center in Zaragoza, with a 1.8 billion euro spend across 2024 and 2025 on streamlining projects.
While shuttering underperforming small stores, Inditex is planning around 5 percent gross space growth through the end of 2026, with a continued focus on larger, more efficient flagships. Recent openings include as the new Zara at Las Vegas’ Forum Shops and a standalone Zara Man in Rome.
Beyond the flagship brand Zara, the group’s other concepts are also growing. Youth-skewing Bershka opened its first shop in Denmark with a flagship in Copenhagen, while other Stradivarius, Zara Home and Oysho all opened across Europe.
Inditex’s retail initiatives also highlight inclusivity. The new Zara Home for&from store in Porto, Portugal, is part of its social impact employment scheme.
The company is staying ahead of economic headwinds with its newly-appointed international advisory board. Stacked with leading economists, business leaders, and policy experts, the group held its first meeting on Nov. 27. The board’s role is to advise Inditex’s own board of directors on geopolitics, international economics, and global strategic issues.
It is chaired by former Italian prime minister Enrico Letta, joined by Taeho Bark, president of the Lee & Ko Global Commerce Institute; British diplomat Simon Fraser; Rafael Gil-Tienda, Oliver Wyman’s chair for Asia-Pacific; Anne Lange, former Cisco director of innovation; Enrique Lores, current chief executive officer of HP; and economist Marcos Troyjo of Columbia University and INSEAD.
