Inditex profits up by 8% with 83 new stores and 10,000 extra jobs in six months

zaraHigh-Street clothing empire Inditex earned €1.26 billion in the first six months of this year, proving once again that Galicia’s most global enterprise is apparently immune to any financial crisis.

Founded by Europe’s richest and the world’s third-richest man Amancio Ortega, 80, Inditex is best known outside of Spain for its budget fashion store Zara.

It also covers the mid-upper high-street ranges Massimo Dutti and Uterqüe, Zara’s cheaper ‘younger sister’ Bershka, cut-price streetwear chain Pull&Bear, underwear retailer Oysho, quality interiors range Zara Home, and budget young fashions store Stradivarius.

Inditex is also one of Spain’s greatest job-creators – of the 10,000 new posts generated between February and July inclusive, a total of 2,421 were on home territory.

Overall, with sales at €10.465bn and net profits at €1.256bn, the company’s earnings have increased by 8% and sales by 11% based upon the same period in 2015.

Positive growth has been seen in every part of the world, including all regions in Spain, where Inditex stores are based – a growth which, on average, sits at 7% compared with the same six months of last year.

Only 17% of sales were reported in Spain, however, with 25% in Asia, 43% in the rest of Europe and 15% in the Americas – the same percentages as last year.

Gross profits rose by 7% to €2.112bn and net profits to just over €16bn over the last year, with gross profit margins up to nearly €6bn or 9% more than last year.

Inditex continues to maintain its expenses under ‘strict control’, which has contributed to its 9% gross profit increase along with its newly-opened physical stores.

Online sales have risen by 13% in the two-month period since August 1, whilst a ‘strong rhythm’ of new job creation – including non-shop-floor positions in its head offices – has been largely maintained thanks to a further 83 stores opened in the first six months of this year in 38 countries.

The latest store to open was the first-ever in Vietnam, on September 8, bringing the total of 7,096 outlets in 92 countries.

From October 5, online sales will extend to Turkey for the first time, meaning 39 countries now have access to internet-based shopping at Inditex stores.

A careful blend of physical stores and web shops is key to Inditex’s development, says chairman Pablo Isla, who reveals the enterprise has invested large amounts in modern technology this year including mobile phone pay points and shopping Apps, which the corporation intends to continue to develop.

Half-year dividends will be paid at 30 cents a share as agreed at the shareholders’ meeting on July 19, in keeping with the 60-cents-per-share annual dividends seen in 2015.

Published Think Spain 26 September 2016

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