Business as usual at Inditex as sales, profits grow again; Spanish market recovers

Inditex simply let its awesome figures do the talking Wednesday as the Spanish giant saw the retail environment shifting in its favour while also continuing to deliver some of the most on-trend fashion around. The company said net profit grew 5% in fiscal 2014 to €2.5bn while operating profit rose 5% to €4.1bn. Net sales jumped 8% to €18.12bn, or up 11% in local currencies. Same-store sales, meanwhile, grew 5% with comps growth in the last five years standing at an impressive 23%. So what did it do right last year? To be honest, the same as it does every year. It focused on a mix of core volume pieces and fashion-focused lines. It opened lots of new stores (343 stores in 54 in markets). That brought its network total to 6,683. It continued its online expansion with e-tail launched in South Korea and Mexico, lifting the group’s e-commerce footprint to 27 markets. And this year it plans to launch online sales in Taiwan, Hong Kong and Macao. The company also said it invested €1.4bn into process automation, store modernisation, and logistics platforms “to cater to new demand challenges”. But what was also key last year were positive factors beyond its control. Despite being global, the world’s biggest fashion retailer still gets as much as 20% of its sales from its domestic market. And that market saw a rebound in 2014 as, despite continuing economic uncertainty, Spanish consumers started to spend again. In addition, negative exchange rate pressures took a back seat, further boosting the company’s sales. The good news seems to have continued into 2015 too, with Inditex saying that sales in the early weeks of the new financial year had continued the growth trend. Currency-neutral store and online sales grew as much as 13% between February 1 and March 14, compared with a lower (but still impressive) growth rate of 11% in 2014. • Separately, Inditex also announced a special employee profit sharing plan in the next two years. The scheme will benefit all of the group’s store, manufacturing, logistics, concepts and subsidiaries employees globally for those who have been with the company for at least two years. That will affect 70,000 of its 137,054 workforce across 54 markets….

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