Inditex 8% profit up in first half

inditex-logoInditex operates Zara and other brands through more than 7000 stores in 91 countries. Inditex first-half operating profit increased eight per cent in the six months through July. Revenue rose 13 per cent in the first weeks of the third quarter, excluding currency shifts, slowing down from growth of 16 per cent in the first half. The company has prioritized online expansion over store openings. The strategy also includes bigger stores in key markets, as part of an attempt to maintain growth after revenue increased eight-fold since the company’s 2001 initial public offering.

Inditex is the world’s biggest clothing retailer with several brands under it viz. Zara, Pull & Bear, Massimo Dutti, Bershka, Stradivarius, Oysho, Zara Home and Uterqüe. Inditex has a number of textile design, manufacturing and distribution facilities in Spain. The company is also benefiting from the steady pace of economic growth in Spain, where the retailer gets about a fifth of its sales. Every part of Inditex’s fashion business is vertically integrated.

Currency fluctuations hurt Inditex on two fronts as the strong dollar raised costs for the 35 per cent of garments the retailer sources from Asian countries. Meanwhile the weakness of the Russian ruble, British pound, Mexican peso and Turkish lira eroded sales growth.