PARIS — Inditex SA has its sights set on the Americas.
The region, which represents 14 percent of the Spanish fashion giant’s store and online sales, will be a focal point in 2015, particularly in the U.S.
Speaking on a conference call with analysts on Wednesday, Inditex’s chairman and chief executive officer, Pablo Isla, said: “The U.S. is a significant market for us. We’re feeling very comfortable about expanding our business in the U.S., where we see a strong growth ahead of us.”
Isla said sales would be driven via “a strong combination of very prominent flagships and online.”
Chicago, Los Angeles, San Diego, Las Vegas, Houston, Dallas, Boston, New Jersey and Seattle are among the key cities to add new units in 2015.
In New York, the group, which owns brands such as Massimo Dutti, Pull & Bear and Stradivarius, intends to boost its presence with two more Zara flagships — one at the new World Trade Center and one in SoHo — following last week’s reopening of the Zara store on Fifth Avenue at 42nd Street, which doubled its space to 43,000 square feet.
E-commerce, operating in the U.S., Canada and Mexico, is expected to perform well for the group, the executive noted.
The U.S. push comes after several years of a cautious approach to the market by Inditex as it focuses on growth in other overseas territories. But the weak economy in Europe, economic turmoil in South America and slower growth in China have pushed brands at all price points to focus more on the U.S., where the economy has generally rebounded.
Inditex reported net profits rose 5.2 percent to 2.5 billion euros, or $3.3 billion, in its fiscal year ended Jan. 31 as Europe’s largest clothing retailer continued to expand its presence with physical stores and new online markets.
Net sales at the Arteixo, Spain-based company rose 8.3 percent to 18.1 billion euros, or $23.8 billion, for the full year.
All dollar rates are calculated at average exchange for the period concerned.
Over the course of the year, Inditex opened 343 stores in 54 markets, bringing its total network to 6,683.
Online, South Korea and Mexico have been added to the firm’s portfolio of 27 e-commerce markets, with Taiwan, Hong Kong and Macao slated to start operations this year.
Total expenditures for the year stood at 1.4 billion euros, or $1.8 billion, including mostly costs of expansion, but also IT and logistics.
Isla remarked that for 2015, capital expenditures are expected to remain “ordinary” at around 1.35 billion euros, or $1.43 billion, while the company would not engage in any “huge” infrastructure investments over the next three years.
In 2015, the group is due to open between 420 and 480 stores, while absorbing between 80 and 120 smaller venues.
Inditex, which generates 19 percent of sales in Spain, its largest geography, also reported that store sales in constant currencies were up 13 percent between Feb. 1 and March 14 of this year, suggesting sales growth will accelerate in 2015.
Isla forecasts the gross margin for 2015 will remain stable at current exchange rates, with small positive effects possible from a weak euro.
“In view of the performance of the group over recent years, a special profit-sharing plan has been approved under which employees will participate in Inditex’s earnings growth in [the next two years]. All employees at stores, manufacturing, logistics, concepts and subsidiaries around the world who have been with the group for more than two years will be eligible,” said Inditex.
The approximately 70,000 eligible beneficiaries will receive 10 percent of the year-over-year profit growth up to a cap of 2 percent of total profit.
Analysts at Bernstein were upbeat about the company’s five-year outlook. “We believe that Inditex has the best business model in apparel. We expect Inditex to grow revenue by approximately 12 percent per year over the next five years, given the mix of space growth (about 8 to 10 percent), new space contribution to sales (75 percent), and like-for-like sales of about 4 to 5 percent,” the firm said in a research note.