PARIS – As luxury spending slows, Zara parent company Inditex saw sales rise across its brands last year, as the fast fashion retailer remains resilient.
Sales at constant currency were up 14.1 percent to 35.9 billion euros in the full year to Jan. 31. even as the company reduced inventory by 7 percent. It also revealed plans to launch its pre-owned resale concept and livestreaming in the U.S.
“Inditex’s performance in 2023 has been excellent. Our teams have been able to take advantage of the opportunities to keep growing profitably. We are investing to drive future growth and continue to offer an attractive remuneration to shareholders,” said chief executive officer Oscar García Maceiras.
That momentum keeps propelling it forward, with this year’s sales starting strong, up 11 percent year-over-year in the period of Feb. 1 to March 11.
As Inditex has invested heavily in omnichannel, the strategy has boosted growth in online sales, which were up 16 percent to 9.1 billion euros in fiscal 2023.
In-store sales rose a solid 7.9 percent, with footfall up while the company expanded and revamped existing stores and shuttered underperforming locations. Adjusting that mix left 5,692 Inditex doors open by the end of 2023.
Growth in new markets was key: Zara opened its first location in Cambodia.
Looking to 2024, Zara will open at The Grove in Los Angeles, Caesars Palace in Las Vegas, in addition to locations in Rome and Hamburg, Germany. Upgrades will come to its outposts in Milan and Shanghai with its new, cleaner concept.
Expansion is also in the cards for Massimo Dutti in Miami, Oysho in Hamburg, Bershka in Mumbai and Zara Home in Bangalore, India.
Inditex will open its first stores in Uzbekistan, though it did not specify for which brand, and re-open its Zara stores in Ukraine.
The company will invest massively in infrastructure, with a 900-million-euro plan to add logistics centers in Europe, mostly Spain and the Netherlands over the next two years.
Inditex’s cornerstone Zara brought in 26.1 billion euros as its top performing brand, followed by younger skewing Bershka at 2.6 billion euros, Pull & Bear at 2.3 billion euros, and Stradivarius at 2.3 billion euros. The company’s upscale brand Massimo Dutti, which recently reopened a flagship in Paris, brought in 1.8 billion euros while its lounge concept Oysho finished up the pack at 744 million euros.
It comes as institutional investors including Artemis Investment, Cardano, Clearbridge Investments, Schroders, Dutch asset manager MN and Norway’s sovereign wealth fund call on the company for more transparency in its supply chain.
In terms of markets, Europe remains its stronghold with nearly 50 percent of sales coming from the continent, excluding Spain, while its home country adds another 15 percent to its global sales. The Americas accounts for 19.6 percent of sales while Asia and the rest of the world represent nearly 17 percent.
Gross profit increased 11.9 percent to 20.8 billion euros, while EBITDA was up 13.9 percent to 9.9 billion euros for the fiscal year. Tight cost controls increased the company’s cash position 13.3 percent to 11.4 billion euros on hand.
The results pleased investors. “We view Inditex as a strong omnichannel fashion retailer, which historically has benefited from its speed to market and product department-driven manufacturing process,” said RBC analyst Richard Chamberlain in a note following the release. “Inditex’s strong sales densities have enabled it to earn a high-teens margin historically, which we think it can maintain.”
