Zara owner hands out staff bonus despite slowing sales growth
Inditex posted a 7% rise in net profits to 3.37 billion euros (£3 billion) for 2017, but saw its slowest sales growth for three years.
About 88,000 staff at Zara owner Inditex are to share more than 562 million euros (£499 million) in bonuses and commission after the fashion giant posted a 7% rise in profits.
The bonus and commission windfall includes a 42 million euro (£37.3 million) extra payout under its profit-sharing plan and will be made to all staff working at the group for more than two years.
It comes as Inditex, the world’s largest clothing retailer, posted net profits of 3.37 billion euros (£3 billion) for 2017, up from 3.18 billion euros (£2.82 billion) in 2016.
But it revealed its slowest global like-for-like sales growth for three years, at 5%, with the chain hit by a tough year for fashion retailers that has also knocked rivals such as H&M.
Inditex’s sales growth is down from 10% in 2016, although the group said all countries including the UK saw like-for-like sales growth last year.
It added that sales in local currencies rose 10% over the year and had slowed since the year-end, rising by 9% between February 1 and March 11.
Its gross margin was also down to 56.3% from 57% in 2016 after the strengthening of the euro last year.
The group is particularly vulnerable to exchange rate movements as it makes more than half of its sales in non-euro currencies, but reports results in euros.
But the bright spot for the group, which also owns Massimo Dutti and Pull&Bear among a raft of brands, was its online sales – up 41% over the year and now accounting for 10% of group revenues.
This came as it boosted its online delivery offering, adding a next-day service in the UK and other countries, as well as same-day delivery in central London, Madrid, Paris, Istanbul, Shanghai and Taipei, and Sydney as its latest addition.
Chairman and chief executive Pablo Isla said it was a year of “solid growth”.
He praised the “unique strength of our integrated stores and online model and its significant growth potential”.
Results showed the number of stores rose 2.5% to 7,475 last year.