LONDON — Zara’s parent Inditex has left the pandemic in the dust and eclipsed its high street rival H&M Group as it reported a double-digit surge in third-quarter sales compared with the corresponding periods in 2019 and 2020.
The Spanish fast-fashion giant, which installed a new chief executive officer a few weeks ago, and promoted Marta Ortega Perez to chair, said Wednesday that growth has been coming from the further fusion of bricks and clicks, and a tightly managed supply chain.
Growth continues to outstrip pre-pandemic levels, with fiscal third-quarter revenue climbing 10 percent compared with the corresponding period in 2019, and 21 percent compared with 2020.
That momentum has continued into the current fourth quarter: Between Nov. 1 and Dec. 10, store and online sales in local currencies increased 10 percent compared with 2019, and 33 percent year-over-year, Inditex said.
In the first nine months, revenue reached 19.33 billion euros, up 37 percent year-over-year, while net profit was 2.5 billion euros, a 273 percent uptick compared with 2020. Inditex said EBITDA totaled 5.43 billion euros, up 63 percent year-over-year.
Inditex’s executive chairman, Pablo Isla, said the results “demonstrate the solidity of our business model,” as well “our strategy of fully integrating stores and online.”
Oscar Garcia Maceiras, the new CEO, added that the third-quarter and nine-month numbers “confirm the significance of extending, deepening and developing our integrated business model,” which he described as the “key differentiating characteristic” at Inditex.
He added that “sustainability and digitization” remain at the heart of the group’s strategy.
Inditex has been looking to weave the two channels together as closely as possible.
The group operates from a single inventory position, and encourages customers to shop agnostically, and return online purchases in-store. During a call with analysts, Inditex principals said they were keeping a beady eye on the supply chain, too, focusing on sourcing and manufacturing as locally as possible, and keeping products moving quickly from factory to warehouse to shop floor.
The company underlined that growth in the quarter was achieved despite having fewer physical stores. Inditex said that in-store sales continued to strengthen throughout the third quarter, outstripping takings in the corresponding period in 2019 with 11 percent fewer stores worldwide.
The focus will remain on creating destination, “high-quality” stores in key locations, the group said, noting that it opened new stores in 39 markets in the three months to Sept. 30. The company said that its physical store estate is now fully open, and it has been seeing recovery across all brand concepts.
Online sales in local currencies registered year-on-year growth of 28 percent in the first nine months of 2021 and growth of 124 percent against the same period in 2019.
They have been climbing so quickly that Inditex now expects online sales to account for more than 25 percent of total revenue in fiscal 2021, a full year ahead of schedule.
Sales at H&M Group, meanwhile, are recovering — but at a fraction of the growth rate at Inditex.
On Wednesday H&M reported that fourth-quarter sales grew 11 percent in local currencies in the three months to Nov. 30, compared with the same period in 2020.
In reported terms, sales grew 8 percent to 56.81 billion Swedish kronor, or $6.23 billion at current exchange.
H&M said sales in local currencies were back at 2019’s pre-pandemic levels but it did not give any figures. In the fourth quarter of 2019, WWD reported that H&M group’s net sales increased by 9 percent. In local currencies, net sales increased by 5 percent.
The Swedish fast-fashion retailer also indicated that sales for its 2021 fiscal year had grown 12 percent in local currencies, for a reported full-year total of 198.96 billion Swedish kronor, or $21.83 billion, compared with 2020. H&M will reveal its full-year report for the 2021 financial year on Jan. 28.
The company stated that its “strong recovery continues,” and noted that “customers are showing that they appreciate the collections, and being able to shop where, when and how they choose,” despite ongoing pandemic-related closures in certain markets.
Inditex, meanwhile, said its net cash position hit a new record, according to the company, reaching 9.57 billion euros, enabled by the company’s “strong” cash generation capacity.
It was a strong set of results for the Spanish group, which has been through a busy few weeks: As reported last month, Inditex made major changes at the top, and completed a generational handover that began a decade ago when founder Amancio Ortega stepped down as chairman.
Maceiras took up the role of CEO at the end of November, while Ortega’s daughter Marta Ortega Pérez was named chair of the group, effective April 1. The company said she will serve as a proprietary director, which means she will be acting in representation of her ownership interest.
Isla, who spent 17 years at Inditex, as deputy chairman, CEO and executive chairman, will leave the company on March 31, as planned, and has been overseeing the CEO handover.
Until now, Maceiras had been general counsel of Inditex and secretary of the board. Like Isla, Maceiras comes from a legal and financial background.
Over the past few weeks, Inditex has been making creative changes as well: earlier this month Zara debuted in the metaverse via a collaboration with the South Korean fashion brand Ader Error called AZ Collection.
AZ Collection exists as a physical streetwear line and a digital one, too.
The collection features oversize puffer coats, long scarves, woolen hats, sweaters and cotton T-shirts with logos and other symbols that nod to the alphabet. There are two pairs of jeans, and three sneaker styles. There is also a varsity jacket, and accessories including crossbody bags, backpacks, glasses and hats.
AZ Collection began selling online and at selected stores in South Korea, Europe, the U.S., China, and Japan on Dec. 6.
The collaboration extends to the virtual world with Zepeto, a digital platform and social media app that allows users to created 3D characters. Customers are able to purchase clothes and virtual makeup for their avatar in the Ader Error x Zara store.
Inditex said the collaboration marked Zara’s “first foray into the metaverse,” and described the new AZ Collection as a reflection on “the identity and uniqueness of each one of us,” with designs that reflect “the lifestyle of a new generation whose personality is being forged by simultaneous experiences in the real and virtual worlds.”