Spanish retail giant Inditex said it plans to launch a web site next month for Zara in India, a fast-growing market that foreign retailers are eager to tap into.
Inditex has an online business in around half of the 94 markets where it operates.
Its plans to add India mark an important step in a market where retailers keen to do business with an exploding middle class face the challenge of an underdeveloped infrastructure. Zara opened a flagship in Mumbai in the second quarter, which Inditex considers important for projecting its image in India and plans to launch the web site on Oct. 4.
The store has outpaced its other units in the country, Inditex executives told analysts in a conference call on Wednesday following the publication of its first-half results. The company has a total of 20 Zara stores in India, along with two stores for its Massimo Dutti brand.
Inditex said profit rose 9 percent in the first half of the year to 1.37 billion euros, as all regions clocked sales growth.
Revenues at the world’s biggest clothing retailer climbed 11.5 percent over the period to reach 11.67 billion euros, with new store openings in 35 countries over the period. On a like-for-like basis, sales for the Zara owner rose 6 percent.
The performance reflected the “strength and sustainability of our integrated off-line/online store model,” Inditex chairman and chief executive Pablo Isla said.
“Regarding online…this is an attractive proposition all over the world. We have next-day delivery now in most cities in the world, and we are beginning to introduce same-day delivery in Madrid and the idea is to expand to other cities,” noted Isla in the conference call.
“This fully integrated approach is a key characteristic of our online offer and we think it is relevant and has significant online growth prospects,” Isla added, citing in-store delivery and the ability for consumers to order online in the stores.
The company’s first-half gross margin — a key indicator of profitability — stood at 56.4 percent, down 40 basis points from the same period in 2016, a decline it blamed on a series of factors, including an earlier drop for the fall collection and pressure from foreign exchange rates. They project a stable gross margin for the full year, which the company defines as varying by no more than around 50 basis points.
The performance fell slightly below expectations, Barclays said in a note to clients Wednesday, pointing to foreign exchange rates and a challenging retail environment.
“However, we tend to think that bringing forward new collections was a sensible move, at a time when H&M was aggressively discounting spring-summer inventories, rendering the competition more intense and summer sales less profitable,” Barclays analyst Julian Easthope wrote in a note.
International retailers based in Europe are being eyed for signs of how much the strong euro may dent business, and Inditex executives noted strong currency movements in recent months.
Swedish rival H&M last week in its quarterly sales report cited steep markdowns over the summer as weighing on business.
Inditex said sales in local currencies in stores and online have grown 12 percent between August and September 2017.