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Inditex Profits Soar as Zara Owners Raise Prices, Retail News, Retail ET


Inditex profits soar as Zara boss raises prices

MADRID: zara owner Inditex announced a 24% increase in net profit for the first nine months of the financial year, as rising prices helped offset weakening global demand for clothing.

the world’s largest fashion retailerstore and online sell up 19% from a year ago, slightly faster than analysts had predicted. It has raised prices by 5% or more since the spring to offset the increased costs.

The company’s net profit from February to October reached 3.1 billion euros ($3.3 billion), up from 2.5 billion euros a year ago.

Inditex has been doing well since Marta Ortega, daughter of founder and owner Amancio Ortega, took over as non-executive president in April.

Known for their ability to quickly deliver the latest designs to consumers thanks to a flexible source, Inditex recently offered a wide range of “high fashion” Zara products designed for special occasions.

The approach has allowed it to sell higher priced items and attract shoppers from luxurious market segments, according to company sources and analysts.

Sales grew 11% in the third quarter, a slower pace than in previous months, reflecting a weakening consumer environment. The company’s second-quarter revenue grew 16% year-over-year.

The fashion giant said its sales from early November to December 8 were up 12% from a year ago. Sales were positive in all geographies, it added.

Analysts say the company will have to deal with more rising costs in the coming months, including pressure from workers for higher wages.

About 1,000 store assistants who work at Zara and its other fashion brands went on strike on Black Friday in La Coruna, the company’s home city in northern Spain, to demand a raise, while others protested in Madrid the day before.

“Strikes have been reported in Spain at Inditex stores indicating further pressure to raise wages. inflationary“, said Deutsche Bank analyst Adam Cocharne.

Those workers are planning to strike again the day before Christmas and early January after rejecting a pay increase offered by Inditex until 2024. Two major local unions have agreed to the proposal. new salary.

Inditex’s main rival H&M became the first major European retailer to begin laying off staff this month in response to rising inflation and soaring costs related to the war in Ukraine.

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