Zara Owner Inditex Report Quarterly Profits Higher Than Pre-Pandemic Levels

The second quarter sale of fashion brand Zara owner Inditex rose above its pre-pandemic levels, outpacing its Swedish rival H&M, as both firms bounced back from the pandemic crisis.

With more stores of Inditex, the biggest fashion retailer of the world, reopening throughout the world and with customers rushing to renew their wardrobe following their prolonged closures because of the strict measures imposed to curb the spread of the pandemic, the company’s sales in the quarter was above the levels seen prior to the pandemic crisis.

Sales of rival H&M during the quarter was lower than expected compared to the same quarter the previous year and remained lower than its pre-pandemic levels. Its sales were hampered by lockdowns and restrictions, especially in Asia, H&M said.

Inditex witnessed progressive recovering of sales across all brands and markets through both stores and online channels, even in the face of some pandemic induced restrictions in Asia, said the firm’s Executive Chairman Pablo Isla.

“We have had a strong start in the autumn winter season,” he told a conference call. “Inditex competitive differentiation is bigger than ever.”

With big cities slowly returning to normality and complete lockdowns being lifted from most cities, consumers have again recently started to spend more on fashion workwear, and this trend is beneficial for the Inditex brands, which include Zara and Massimo Dutti, said analysts.

The Spanish company reported net profit of 850 million euros for the second quarter which was more than the profit of 214 million euros ($181.14 million) reported by the company for the same period in 2020 and was 4 per cent more than the profit reported by the company in 2019 prior to the pandemic.

In the May-July quarters, the sales increased to 6.99 billion euros, which was 7 per cent higher than the sales in the same period in 2019, Inditex said, with customers again beginning to purchase clothes for summer social events.

The sales during the second quarter were in line with the 7.02 billion euros expected by analysts polled by Refinitiv.

The company also noted a 22 per cent year on year growth in shop and online sales at constant exchange rates between August and the first week of September, while it was also 9 per cent higher than the sales in the same period of 2019 – prior to the pandemic.

Even though many of the fashion retailing brands are currently one a revival path, some restrictions imposed because of the spread of the Delta variant of the coronavirus, while supply chain issues caused by  a shipping container shortage and other bottlenecks are impacting many industries, including fashion.

There was a 36 per cent year on year growth in online sales of Inditex even though restrictions on mobility in key markets including Britain, Germany and France were in place which forced many customers to shop online.

About 25 per cent of total sales for the current year would be accounted for by online sales, expects the company. The company said it will launch a men’s sports collection under the name Zara Athleticz at the end of September.

(Adapted from USNews.com)



Categories: Economy & Finance, Entrepreneurship, Regulations & Legal, Strategy, Sustainability, Uncategorized

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