Economy

Zara Powers Inditex to Gains, With Growth Planned Online and at Stores

Zara Powers Inditex to Gains, With Growth Planned Online and at Stores

Inditex, owner of fashion chain Zara, has reported a 7% jump in annual net profit despite negative headwinds from a strong euro and helped by double-digit growth in online sales. Its online clothing sales performed very well.

But its shares bounced back from early losses on Wednesday, as investors cheered strong online sales growth and Chief Executive Pablo Isla said margins should hold up this year.

Sales: Net sales for the year ended January 31, increased 9 percent to 25.34 billion euros ($31.46 billion), compared to 23.31 billion euros ($28.85 billion) in fiscal 2016. "The prescient investments made in technology and logistics in recent years, coupled with space optimization, mean the company is well placed for continued growth across all its markets", he said.

In addition, models can pop up on packages of online purchases delivered to customers, showing alternative outfits. Radio-frequency identification tags on clothing keep a tight control on inventory, allowing mobile phone apps to notify customers if certain items are available at nearby stores.

Inditex's gross margin was down around 140 basis points in its fourth quarter, steeper than an expected 120 basis point drop, said Richard Chamberlain of RBC Capital Markets.

'Shooting' prompts lockdown at Northwestern University in Evanston
Englehart Hall, a residential building for graduate students, is about three blocks from the school's main campus. Northwestern police said in a tweet that there is no evidence of a victim or gunman found at the residence hall.

The group reported net profit of 3.37 billion euros (S$5.5 billion), in line with analyst expectations, on revenue of 25.34 billion euros, also in line with analyst expectations for the financial year which runs from February to January.

Inditex is vulnerable to foreign exchange rates as it reports in euros yet makes around half its sales in other currencies.

The company said sales at constant exchange rates grew 9% in the first five weeks of the new financial year as shoppers snapped up items from the spring/summer collections like printed maxi dresses, linen separates and pastel blazers from Zara.

This was slower growth than expected by some analysts, but rivals are also likely to have suffered from cold weather in early March which brought snow to many European cities, analysts said.

The company is raising its dividend by 10 per cent, which increases its payout ratio to 69 per cent, according to Ms Critchlow.


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