Zara owner reports increased sales despite cost of living pressures | Zara

The owner of fashion retailer Zara reported increased sales and profits in the first half of the year as consumer demand for new clothes remained strong despite cost of living pressures.

Inditex, which is Europe’s biggest clothing retailer with a portfolio of chains including Massimo Dutti, Pull&Bear and Bershka, said profits for the six months to July rose 41% to a new record high. Sales increased by about a quarter and increased in all regions.

The company said revenue from February to the end of July rose to €14.8bn (£12.8bn), from €11.9bn a year earlier, an increase of nearly by 25%, when it posted a net profit of 1.79 billion euros.

The Spanish retail giant reported a rebound in sales this spring, after shoppers flooded its high street stores following the easing of Covid-19 restrictions.

Inditex Managing Director Óscar García Maceiras said the company’s strong results were the result of “our unique fashion proposition, an increasingly optimized shopping experience for our customers, emphasis we place on sustainability, as well as the talent and commitment of our people”.

He added that the company had “great growth potential for the future”.

Inditex shares jumped 5% in morning trading on the Madrid stock exchange after the results.

Amid mounting cost-of-living pressures on consumers, Inditex said sales momentum had continued in recent weeks and its new fall and winter clothing ranges had been well received by consumers. clients.

Inditex said it plans to invest more than 1 billion euros this year in growing its business, spending money on stores, its online sales platform and improving the customer experience. .

Online orders are expected to account for more than 30% of all sales by 2024. Despite this, the company continued its store expansion plans and opened stores in 24 markets in the six months prior. July, taking the total number of outlets. at 6,370.

In March, Inditex closed all of its 500 outlets in Russia – its second largest market in terms of stores – in response to the Kremlin’s invasion of Ukraine, which resulted in a 216 million charge. euros on the company.

Wary of future supply chain issues, Inditex said it was holding more fall and winter inventory in its warehouses to ensure products remained available.

In May, Zara joined the ranks of retailers who started charging shoppers for returning unwanted items and introduced a £1.95 fee for online returns.

Victoria Scholar, chief investment officer at online investment platform Investor Interactive, said the company has not reported any significant impact from the policy change.

She added that Inditex had “successfully passed on some of its cost increases to customers through higher prices at Zara in particular, without negatively impacting demand.”

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