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Zara Clothes Group Reports Profits Jump

Published: March 21, 2012 | 12:25 pm
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Spanish firm Inditex, the world’s biggest clothes retailer under the Zara brand, reported a 12-percent surge in net profit for 2011 on March 21 owing to worldwide expansion, notably in Asia.

Net profit for the year stood at 1.932 billion euros ($2.56 billion), the company said, after it opened its first stores in five countries including Australia, spreading its high-street presence to five continents.

The figure was slightly higher than market expectations, after analysts polled by Dow Jones forecast 1.92 billion euros.

The retailer, which also owns the Massimo Dutti and Bershka brands, currently sells clothes online in 18 European nations plus Japan and the United States.

By comparison Inditex rival H&M of Sweden has reported a net profits fall of 15 percent in 2011 to 1.79 billion euros.

Inditex/Zara is studied with particular interest in Europe because of its huge success but also because it is exporting clothes to countries which themselves are big exporters of clothing to Europe, where textile industries have been hard hit over many years.

“We have achieved sales growth in all the different markets,” said Inditex president Pablo Isla during a conference call with analysts.

Net sales for Inditex’s trading year, which it counts from February 2011 to January 2012, rose by 10 percent to 13.793 billion euros, it said. Its adjusted figure for earnings before interest, tax, depreciation and amortisation (EBITDA) also rose 10 percent to 3.258 billion euros.

China remains a priority for the company. Out of 483 new stores opened in 2011, 132 were in China alone.

In China, “2011 has been a year of strong expansion, 2012 will continue to see strong growth. We plan to open around 130 stores per year over the next few years,” said Isla.

Inditex said it would start selling its flagship Zara brand clothes over the Internet in China later this year.

“Zara will begin offering its fashions online in China during next winter season, extending its e-commerce business to one of the fastest-growing markets for Inditex concepts,” it said.

During the year the firm opened its first stores — all under the Zara brand — in Australia, Taiwan, Azerbaijan, South Africa and Peru. It also expanded in Japan, South Korea and India.

“Following its debut in the Australian market, Inditex further cemented its role as a global fashion retailer with stores on five continents,” the company said in its earnings statement.

The firm now counts 5,527 stores in 82 countries under marks such as Zara, Pull and Bear, Bershka and Massimo Dutti.

It said it planned to keep up the pace in 2012, opening between 480 and 520 new stores worldwide.

“2012 will be a year of strong expansion for Inditex,” said Isla.

Inditex’s worldwide performance has helped it perform well despite worsening economic conditions in its home country Spain, which is facing recession and an unemployment rate that reached 22.85 percent at the end of 2011.

The first Zara shop opened in 1975 in La Coruna in northwestern Spain, a city that is still home to its headquarters. It employs more than 109,000 people worldwide and has been credited with inventing the ‘fast fashion’ phenomenon.

Source: AFP


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