Translated by
Nicola Mira
Published
Mar 16, 2017
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Inditex revenue up 12%, driven by 10% comp sales rise and store openings in 56 countries

Translated by
Nicola Mira
Published
Mar 16, 2017

The constant revenue growth of Spanish group Inditex, Zara's parent company, is not driven by store openings alone. This is all the more remarkable at a time when Gap has been streamlining its retail network for two years, and H&M has for the first time mentioned the possibility of store closures. The success of Inditex's business strategy was confirmed by the group's recently published annual results.

 

Zara's 'Join Life' sustainable collection - Inditex


In the 2016-17 fiscal year, which ended in January, the Spanish group was actually very busy with new openings: as many as 102 in Europe, 116 in Asia and 61 in the Americas, giving the group a presence in 93 countries, with e-stores deployed in 43 markets. Altogether, at the start of its new fiscal year, Inditex is operating a total of 7,292 stores, 2,213 of them Zara, after the fast-fashion label opened 51 new shops last year.
 
Yet, unlike for its competitor H&M, new openings are not the main growth driver for Inditex. The Swedish apparel retailer has not published comp sales figures since 2014, and last year its revenue grew 6% in local currency, chiefly boosted by the expansion of its store network.

Inditex instead posted a 12% revenue rise in its latest fiscal year, with comparable sales up too, by a remarkable 10%. Such a low correlation between sales and store growth is striking, though it does not stop the group from constantly inaugurating new retail outlets at a steady rate.

"The group is forecasting a rate of new store openings similar to that of previous years, in-keeping with the strategy of constantly increasing its sales area, by opening flagship stores in the world's leading commercial districts and by assimilating smaller units into neighbouring stores," wrote Inditex in its annual financial statement.
 
Nearly 280 new stores are expected to open in the 2017-18 fiscal year, with nearly 70% of the lease agreements reportedly already signed at present. Among the most significant openings there are Zara's in Nagoya (Japan), Doha and Mumbai. In the second half of the year the group is also planning to begin e-tailing operations on the huge Indian online market. Before then, Zara will open a flagship store on Paseo de la Castellana in Madrid, and will re-open its Opéra store in Paris and the one at White City shopping mall in London.
 
As for the group's other retail brands, Zara Home will soon set up shop in Zurich and Vienna, and also on Shanghai's Nanjing Road. Pull&Bear will inaugurate a flagship store on Calle Preciados in Madrid, and Bershka will deploy in the city of Changsha, China. Stradivarius will instead renovate its flagship store on Portal del Angel in Barcelona.

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