// Inditex posts an increase in profits and sales in its first quarter
// The Zara owner credited it to a positive performance across “all geographical locations”
Zara owner Inditex has reported a better-than-expected 54% rise in first-quarter profit, as sales kept pace after a strong 2022, when it outperformed other retailers amid the cost of living crisis.
The world’s biggest fashion company, which owns brands including Zara, Bershka and Pull&Bear, posted a 14% rise in gross profit to 3.96bn as well as a 14% increase in EBITDA to £1.89bn for the three months to April 30, 2023.
It also saw a 13% increase in sales to £6.54bn for the period.
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The company said in a release that sales were positive in all geographical areas and in all concepts.
In-store and online sales rose 13% to £6.5bn in the first quarter, in line with the 13.5% in the first six weeks of the 2023 financial year reported earlier in the year.
The results suggest Inditex, whose market capitalization exceeded 100bn euros for the first time last week, has managed to navigate the challenges of keeping prices competitive despite cost pressures, including a 20% rise in average wages for shop workers in Spain.
Part of the group‘s strategy is to maintain higher prices outside the Eurozone. In countries such as the United States, Mexico or Saudi Arabia some clothes are up to 91% more expensive than in its home market.
Lower demand in the US caused by a tougher macro environment has been offset by less weather-affected sales in southern Europe.
Despite its scale, Inditex said there is ample room for growth in 2023 and beyond. Worldwide, the company operates with “low share in a highly fragmented sector” and sees “strong growth opportunities”.
The group plans to open 30 more stores in the US in two years and has also been investing more in the customer experience at stores with new self-scanning checkouts and replacing hard anti-theft tags with chips sewn into garments to avoid long queues.
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