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Zara Owner Inditex Reports 'Stunning Figures'

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ZARA STUNNING FIGURES
Zara's fortunes continue to rise as the middle class retailer aggressively expands across the world | Getty Images

Inditex, owner of the Zara brand and the world's largest clothes retailer, has reported a huge jump in profits, fuelled by a fast international expansion.

Inditex reached an epic 6,000-store mark on 5 December when it opened its new eco-efficient Zara on London's Oxford Street.

The Spanish-owned retailer boasted a 12% rise in full-year net profit, with pre-tax profits reaching £15.8 million, bucking the trend for high street clothing retailers.

Richard Perks, director of retail at Mintel, hailed the results as "stunning".

"These are stunning figures - how do you put on that sort of sales growth when your core market is so weak? (Although to be fair, Inditex has been gaining a lot of market share in Spain)," he told Huff Post UK.

"There was a 6.5% increase in store numbers, but even so there is a lot of underlying growth in there. I suppose it's quite simply that the group is right at the top of its game. Even in tough times, people want to be fashionable and Inditex's ability to read fashions and get them to the stores quickly is what it's all about."

It might seem odd that Zara's middle class price bracket is not feeling the pinch as much as other retailers during the recession, but it's believed by analysts to be performing well for two reasons; one, the clothing is bang on trend and two, people are still prepared to shell out for middle-of-the-range prices as long as they feel there is a value attached.

In a Huffington Post UK report into the rise of middle class shops, Jaana Jatyri, founder of fashion forecasting company Trendstop.com said when times are tough, a large chunk of shoppers become deeply 'small c' conservative.

"When belts are tight, any clothes purchase feels like an investment. And paying a premium for a quality item which may last beyond the end of the season makes sense," she said.

"The middle-Britain stores are perfectly placed to capitalise on this, with their image of quality goods and reasonable prices."

The UK is a hugely important market for the Inditex group; The company first ventured into the UK in 1998, when Zara opened its first outlet on London's Regent Street. Zara currently has locations at key spots on the London shopping map, including Oxford Street, King's Road and Brompton Road, among others, in addition to its stores in the country's major cities.

In a recent survey by online recommendation site Dressipi - which is chaired by former M&S chairman Sir Stuart Rose - a third of 40,000 women asked for their favourite fashion brand chose Zara.

Sweden's H&M, came second, followed by Sir Philip Green's Topshop, River Island, Next and Mango.

Marks & Spencer – which has been criticised for the dowdiness of some of its women's clothing - came a lowly seventh.

Younger women preferred Topshop to Zara and H&M, while older women still backed Marks & Spencer.

A third of 40,000 women asked for their favourite fashion brand by the online recommendation site Dressipi - chaired by Sir Stuart, who ran M&S for three years until last January - chose Spanish-owned Zara.

“Being the world's largest clothing retailer and having one of its most iconic brands in Zara is a wonderful antidote to being a Spanish company amid the current malaise there. And providing Chinese consumers with an online offering may turn out to be another masterstroke by this miracle of recession retailing," Nick Hood, business analyst at Company Watch told Huff Post UK.

“The good news is that Inditex is working off a remarkably solid financial base, with a cash mountain and unusually strong working capital resources."

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