Zara, the major division of the Spanish retailer Inditex continues to change retailing through its rapid, vertically integrated supply chain. Zara has become the leader in rapid development of fast changing fashions.
In fiscal 2014, (ended January 31, 2015) the company had sales of $19.7 Billion compared to H&M with $20.2 Billion, Fast Retailing (Uniqlo) $16.6 Billion, Gap $16.4 Billion, Primark $7.5 Billion, Abercrombie & Fitch $3.7 Billion, Mango $2.1 Billion. In the past year Inditex sales increased 8%, far stronger than its competitors.
The secret of fast fashion retailing is the ability to generate quick turnover of merchandise in the stores. New fashion designs are shipped at a rapid rate, there are few basics and reorders are rare. The customer knows that she should buy an item she likes when she sees it. The Inditex Group prides itself to deliver quality merchandise in as little as three weeks from its own factories. Designers develop new models daily – sometimes three or four a day – which are then reviewed and are put into production. It is no wonder that versions of new designs by fashion designers in Paris are in Zara stores within a very short time of appearing on the runway.
Inditex is headquartered in La Coruna, Spain. However, several divisions have their headquarters in the Barcelona region. The company was started in 1963 by Armancio Ortega (78), who holds about 60% of the stock and is today Spain’s richest man. He is still a driving force in the company, although in 2008 he has given Pablo Isla (51) the mandate to run the company day to day. He is today the chairman and CEO of the company. Ortega’s daughter Marta (31), who has joined Inditex, after studying marketing, could possibly be the successor to Isla, keeping the family fortune under her control.
Below is a list the various divisions of Inditex. All divisions are showing strong earnings and have the potential for additional growth. In addition all divisions have a strong on-line platform. The surprise is that despite the wide global distribution of 6,683 stores in 88 countries there are only 55 stores in the United States – 53 Zara stores and 2 Massimo Dutti stores. I suspect there will be an intensification of store expansion in the United States including Zara Kids, Zara Home and one of the other labels such as Bershka. I expect that Massimo Dutti with its better fashion look will soon have more stores in some of our better shopping areas.
Zara – Fast Fashion for women, men, children. 1,923 stores in 88 countries. 2014 sales $12.6 Billion with 53 stores in the United States. EBIT contribution $2.314 Million which is an EBIT Margin of 18% and is 66% of total company profits. (Founded 1975)
Zara Kids – This is a new division which has 162 stores in four countries but is still integrated in the Zara organization. No separate data is available. (Recently founded)
Pull&Bear – Casual wear – Key target customers are women and men 14 to 28 years old.- 898 stores – 2014 sales $2.1 Billion. No stores in the United States. EBIT contribution $205 Million which is an EBIT margin of 15% and is 6% of total profits. (Founded 1991)
Massimo Dutti – Better price fashion for mature women and men – 706 stores – 2014 sales volume $1.5 Billion, 2 stores in the United States, EBIT contribution is $291 Million which is an EBIT margin of 19% and is 8% of total profits. (Founded 1985)
Bershka- Value priced fashions for young women and men – 1006 stores – 2014 sales $1.9 Billion. EBIT contribution is $267 Million, which is an EBIT margin of 15% and is 8% of total profits. (Founded 1988)
Stradivarius – Casual wear for women – 910 stores – 2014 sales $1.2 Billion – EBIT contribution – $247 Million – which is an EBIT margin of 20% and is 7% of total profits. (Founded 1995)
Oysho – Lingerie and sportswear – 575 stores – 2014 sales $453 Million – EBIT contribution – $71 Million – which is an EBIT margin of 16% and 2% of total profits. (Founded 2001)
Zara Home – Home and Accessories – 437 stores – 2014 sales $651 Million, EBIT contribution $88 Million which is an EBIT margin of 15% and 3% of total profits. (Founded 2003)
Uterque – Designer RTW fashions and accessories – 66 stores – 2014 sales $74 Million. EBIT contribution $2.2 Million which is an EBIT margin of 2%. (Founded 2008)
Lefties – About 80 outlet shops in Spain Portugal, Mexico and Russia. These stores are included in the store count.
Note – All figures in this report are based on the current conversion rate of 1 Euro = $1.09.
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