Inditex Posts Record Profit Before Founder's Daughter Takes Helm

Zara fast-fashion chain owner Inditex posted a record third-quarter profit on Wednesday just months before the daughter of the company's founder is set to take over as chair

Madrid, (APP - UrduPoint / Pakistan Point News - 15th Dec, 2021 ) :Zara fast-fashion chain owner Inditex posted a record third-quarter profit on Wednesday just months before the daughter of the company's founder is set to take over as chair.

Net profit in the three months to the end of October hit an "all-time record" of 1.23 billion Euros ($1.39 billion), a 42 percent jump over a year earlier as in-store sales rose above pre-pandemic levels, the company said.

These results are close to the forecast of analysts surveyed by the financial information provider Factset, which expected a profit of 1.26 billion euros in the third quarter.

In-store sales in the third quarter were up 21 percent from the same period last year, and were 10 percent higher than in 2019 before the health crisis hit the global economy, the company said.

The company posted a net profit of 2.5 billion euros during the first nine months of its 2021 fiscal year, which starts on February 1.

That is up 273 percent from the same time last year, but still below the 2.7 billion euros reported in the same period in 2019.

Rival H&M also on Wednesday reported rebounding sales as shoppers returned to the high streets, though the 8 percent gain in its fourth quarter that ended November 30 remained below pre-pandemic levels.

The Swedish giant's sales were 56.8 billion krona (5.5 billion euros), compared with 61.7 billion in the same period of 2019, it said.

Inditex fell into the red in the first half of 2020 for the first time in nearly two decades after having had to close 90 percent of its stores around the world due to the Covid-19 pandemic.

The company responded by boosting its online presence and stepping up the reorganisation of its network of stores to concentrate on larger shops located on main avenues.

The strategy appears to have paid off.

As of the end of October Inditex had 6,657 outlets around the world, 540 fewer than a year ago yet in-store sales still rose.

Sales have continued to be strong in the fourth quarter. Between November 1 and December 10, in-store and online sales are up 33 percent over the same year-ago period.

And the company -- which began internet sales later than its main rivals -- said it expects 25 percent of its total sales this year to come from online shoppers.

The results "demonstrate the solidity of our business model," said Inditex Chairman Pablo Isla.

"Today all of our shops are open," he added.

- 'Good financial health' - The recovery in sales sets the scene for Marta Ortega, the 37-year-old daughter of the company's founder Amancio Ortega, to take over as chair in April, replacing Isla, who has occupied the post since 2011.

She also briefly worked anonymously as an employee at the group's shops in 2007, reportedly stocking shelves, to get a better understanding of how they operate.

Marta Ortega will take over a firm in "good financial health" although it faces "fragilities" such as its delay in going online that she will have to overcome, Jaume Hugas, an economics professor at Spanish business school ESADE, told AFP.

Her arrival "should not lead to major changes" at Inditex since Ortega has occupied several top posts at the firm for the past 15 years.

Amancio Ortega has not had an executive role at Inditex since he resigned as chairman in 2011 and was replaced by Isla, although his entourage says he regularly visits the company's headquarters in Arteixo in northwestern Spain.

He remains the firm's largest shareholder with a 59 percent stake and is one of the world's richest men.

Inditex owns seven other brands in addition to Zara, including upmarket Massimo Dutti and teen label Stradivarius.