Inditex, which owns fashion retailers Zara, Pull & Bear, Bershka amongst others, has reported a “very satisfactory development” of sales in both physical stores and online for the first nine months of 2023. It added that sales “were positive” across all its geographical areas.
The company also reported that its expenses had increased 10.6%, below its sales growth.
In the nine months to 31 October 2023, Inditex opened stores in 36 of its markets and operated a total of 5,722 stores by the end of this period.
Key results for Inditex in 9M 2023
- Sales grew 11.1%, or 14.9% on a constant currency basis, reaching a total of €25.6bn
- Gross profit increased 12.3% to €15.2bn
- Company sees a “normalisation in supply chain conditions”.
As the company saw a “normalisation” of its supply chain, Inditex reported a 5% reduction in inventory between October 2022 and October 2023.
In China, the company reported success with its new weekly livestream experience on Douyin, the local version of TikTok. The five-hour streams include catwalks, fitting room walkthroughs and behind-the-scenes clips from staff. Inditex says the experience will be extended to other markets soon.
Inditex has also rolled out new security technology in its Zara stores globally, eliminating the need for hard tags. It expects the system to be fully implemented by the end of FY 2024.
Alice Price, apparel analyst at data and analytics company GlobalData said the results confirm that Inditex has an "unrivalled position" within the apparel market.
Price added: "Though this performance was impressive, it was a slight slowdown from H1 when it grew 13.5%, as the economic pressures in its key markets drove a drop in demand. The group reported that its operating profit increased by 24.3% to €5.2bn, putting Inditex in a strong position to continue developing its proposition going forwards."
What’s next for Inditex?
Looking ahead, Inditex said that its autumn/winter collections have been “very well received” by customers so far, with sales between 1 November and 11 December 2023 increasing 14%, on a constant currency basis, compared to the same period in 2022.
Inditex said it expects to see "increased sales productivity" in its stores going forward. It estimates that gross store space in 2023 will increase by around 3%, with store "optimisation" ongoing. The company added: "We continue to see a very satisfactory evolution of online sales and an increasing participation in the Group total."
GlobalData's Price added: “Q4 got off to a good start, with Inditex’s autumn/winter collections continuing to be well received by consumers. Sales across all channels grew 14% in constant currency between 1 November and 11 December, as its vast partywear offering makes it top of mind for shoppers of all ages."
However, Price also noted controversy surrounding Zara's recent marketing campaign called ‘The Jacket’, which featured images that some consumer believed resembled those from the ongoing conflict in Gaza. She said: "The brand has since pulled the campaign and apologised for its ill-timing, but it is yet to be seen whether the controversy will have a material impact on sales."
The company said it sees “strong growth opportunities” ahead and increasing its focus on sustainability is a “key priority”, with the ultimate aim of reaching zero net emissions by 2040.
Zara has now rolled out its pre-owned platform in 14 new European markets, after already launching the offer in the UK and France. The site allows customers to donate, repair or resale products.
In October, Inditex entered into a three-year partnership with material science company Ambercycle, to purchase textile-to-textile recycled polyester cycora for more than €70m.
In October, Inditex signed a framework agreement with global fashion manufacturer organisation the International Apparel Federation to drive transformation across the global fashion and textile industry.
