Monday 10 December 2018

Online sales surge at Zara helps owner Inditex offset sluggish shops

Zara is just one of the brands controlled by Inditex
Zara is just one of the brands controlled by Inditex

Shares in Zara owner Inditex rose by just over 3pc yesterday in Madrid after the company reported a 41pc increase in revenue from online sales in 2017.

Revenue from online sales now accounts for 10pc of the total group revenue, with its websites attracting more than 10 million visits per day.

Overall, total revenue for the year at the group behind Zara, Massimo Dutti, Bershka, and Pull and Bear was €25bn, while the group saw its earnings before interest and tax increase to €4.3bn, a 7pc increase year-on-year, according to the group's annual return.

Like-for-like sales at the Spanish company expanded by 5pc during the year, with all geographies and brands delivering growth by this measure, contributing to a net profit of €3.4bn, a 7pc increase year-on-year.

However, while sales increased, they grew at the weakest pace in three years, and the company's gross margin fell to its lowest level in a decade, with investors raising questions about chief executive Pablo Isla's strategy.

The group's store count at year-end 2017 increased by a net 183 stores to 7,475 stores in over 90 countries worldwide. This included the opening of 524 stores in 58 markets, offset by 341 smaller units which were replaced or absorbed by larger stores.

Mr Isla described it as a year of "solid growth" for the company, and highlighted, "the unique strength of our integrated stores and online model and its significant growth potential". He said "the prescient investments made in technology and logistics in recent years, coupled with space optimisation, mean the company is well placed for continued growth across all its markets".

Since the year-end, store sales in local currencies increased by 9pc between 1 February and 11 March 2018.

thomas Mulier/Bloomberg

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