Zara parent company Inditex reported a rise in profit on strong sales of its spring and summer product lines, which include a Barbie capsule collection.
Inspired by the recently released Warner Bros. film, the highly anticipated new arrivals include an $89.90 pink plaid dress, a $149 Barbie signature bag, and a model of the Margot Robbie character from the movie. Replicas of denim clothing.
many items Sold out within hours The influx of customers has helped Inditex shares rise 35% this year.
The world’s largest fast-fashion company, which also owns Pull & Bear, Bershka and Massimo Dutti, posted net profit of $2.7 billion (€2.5 billion) in the six months to July 31, according to the data. market forecast. London Stock Exchange Group.
Inditex told shareholders on Wednesday that half-year sales rose 13.5% to $18 billion (16.9 billion euros), with growth in stores and online. Among them, Zara’s sales increased by 13.1%, reaching 13.3 billion US dollars (12.4 billion euros).
Inditex shares fell 3.2% to 34.65 euros in afternoon trading on Wednesday, with investors questioning whether its slowing sales growth portended a more difficult road ahead.
How CEOs drive growth
A surge in Inditex shares this year has offset a decline experienced after Garcia Maceiras was unexpectedly appointed chief executive in late 2021. The company is currently experiencing a share price decline not seen since the summer of 2017.
Inditex was one of the first fashion retailers to raise prices early last year in response to soaring inflation. Its higher and more diversified pricing strategy outside its home market of Spain helped it achieve record profit margins.
Maceiras is stepping up efforts to grow the retailer’s flagship Zara brand in the United States, which two years ago became Inditex’s biggest market after Spain, with plans to open 10 new stores in the country and renovate or expand another 13. .
But overall, Inditex has managed to grow sales while reducing its physical footprint. In the second quarter of this year, the fast fashion giant reduced its global store count from 5,801 to 5,745 to focus on larger and more efficient stores.
The company said those efforts include combating in-store shoplifting by replacing tags with chips sewn into clothing from its fall and winter collections. Tell Reuters.
The retailer is also trying to attract more aspirational shoppers with deep pockets. Last week, for example, it launched a collection with famed fashion photographer Steven Meisel and a campaign featuring supermodels including Linda Evangelista, Irina Shayk, Gigi Hadid and Kaia Gerber.
Looking ahead, the company said it “continues to see strong growth opportunities” due to its current low market share in the 213 countries in which it operates.
economic background
Bank of America analyst Geoffroy de Mendez said thousands of small retailers and mom-and-pop stores have been struggling with high inflation, with at least 24 brands filing for bankruptcy or undergoing restructuring since June last year.
Bed Bath & Beyond, M&Co, Secoo and Joules have all entered administration in the past year in the face of rising energy bills and interest rates, as well as declining consumer confidence.
Overall, however, second-quarter results for European fashion brands were mostly positive. Inditex rivals H&M and Mango also performed better than expected this year.
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