Inditex, parent of Zara, is keeping up its pace of expansion.
This story first appeared in the June 17, 2015 issue of WWD. Subscribe Today.
The company opened 63 net new stores in 27 markets during the quarter, including a Zara flagship on Oxford Street in London, and expanded retail spaces in Tokyo, Belfast, Tel Aviv and New York. The store on Fifth Avenue and 42nd Street in Manhattan also has doubled in size.
And that is only the beginning: The retailer said Wednesday that capital expenditure will be 1.35 billion euros, or $1.52 billion, this year.
Pablo Isla, chairman and chief executive officer, said Inditex saw “significant growth opportunity globally” and a “strong potential to expand over the next couple of years,” due to the company’s fully integrated distribution platform, speed to market, and plans to expand on- and off-line.
Still, shares in Inditex closed down 0.5 percent at 29.85 euros, or $33.68, Wednesday despite robust sales and profits in the first quarter — and a strong start to the current one.
Isla pointed to some of the quarter’s highlights, such as the introduction of personal tailoring services at Massimo Dutti in Spain, the expansion of Zara Home, which opened its largest store worldwide in Italy’s Piazza San Babila, and a fresh image for Bershka, reflected in a new flagship in Turin.
In the three months ending April 30, Zara accounted for two-thirds of group sales, with retail brands Zara Home, Stradivarius and Uterqüe, the high-end women’s clothing and accessories line, performing particularly well in the quarter, Isla said.
Net profit at the Spanish fast-fashion giant climbed 28 percent to 521 million euros, or $573.1 million, in the first fiscal quarter, outstripping analysts expectations by 3.4 percent.
Sales in the three months advanced 17 percent to 4.37 billion, or $4.81 billion, on a reported basis, and 13 percent on a constant currency one, with growth coming from new store openings and refurbishments, like-for-like sales and a weaker euro.
The momentum has continued into the second quarter with sales up 13.5 percent on a constant currency basis in the period from Feb. 1 to June 7. Dollar figures have been converted from euros at average exchange rates for the periods to which they refer.
Analysts at Bernstein Research in London called it a “cracking start to the year,” for Inditex, adding that “strong balance sheet management” has continued, with a net cash position of 4.1 billion euros, or $4.51 billion, at the end of the quarter.
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