Zara owner Inditex saw profits soar to almost €7 billion (£6 billion) as the Spanish-founded chain continues to dominate while rivals in the fast-fashion sector struggle.
The business reported sales just short of €36 billion. That suggests Inditex is still on top of the low-cost fashion world as it fends off the challenge of cheaper Chinese rival Shein, which has been looking at a possible blockbuster London IPO. Profits were up 28% at €6.9 billion, with €5 billion coming from Zara alone.
British rivals like Boohoo and ASOS have struggled to keep up the same momentum against Shein’s rise, with shares in both down more than 90% since early 2021. Sweden’s H&M, Zara’s most natural rival, has also struggled to keep up.
Inditex says it's focusing more on quality and detail. That could help it stand out from the Chinese upstart, which is rarely associated with those traits. It’s also spending €1.8 billion on new warehouses to grab more of the online market, where Shein is comfortably the leader.
The shares rose 4.6% to €42.97 in Madrid today, valuing the company at €134 billion.
CEO Oscar Garcia Maceiras said: ”Inditex’s performance in 2023 has been excellent.
“Our teams have been able to take advantage of the opportunities to keep growing profitably. We are investing to drive future growth.”
The firm upped its dividend by 28%.
Victoria Scholar, Head of Investment, interactive investor said: “Zara is successfully navigating the economic headwinds and outshining its biggest rival H&M thanks to its impressive ability to position itself as both quality and affordability. It doesn’t participate in the race to the bottom on price with the likes of Shein, but instead nimbly keeps up with the latest high-end trends, quickly responding to customer demand by increasing supply of popular items.
“Zara offers a range of prices to suit different tastes and budgets, from its cheaper, basics range up to its more luxurious, expensive items, which helps the brand to remain economically resilient amid shifting propensities to spend.”
