Inditex, owner of Zara and Pull & Bear, has recorded record results for the first half of 2022, with sales up 25% year-on-year, hitting £12.8bn and generating record profit of £7.4bn. Its gross margin of 57.9% is the highest it has seen for seven years.
The record results have been driven by a focus on opening up new stores across 24 geographies, but the fashion retail group has also seen online sales continue to rise, growing 11% year-on-year and likely to account for at least 30% of total sales by 2024, says the company.
Sales growth has been seen across the fashion retail group’s entire portfolio. Zara sales grew 29% to £9.1bn; Pull&Bear sales are up 19% to £810m; Massimo Dutti sales rose 10% to £624m; Bershka sales grew 15% to £866m; and Stradivarius sales were up 17% to £790m.
However, like all retailers, Inditex is having to keep a weather eye on the economic conditions. In the face of possible supply chain tensions going into 2H2022, Inditex says that it has temporarily accelerated Autumn/Winter inventory inflows in order to increase product availability without any change to commitment levels. As a result, inventory as of 31 July 2022 increased 43%.
The Autumn/Winter inventory is considered to be of high quality and is consistent with the strong sales trends in previous quarters and the sales performance going into the 2H2022. As of 11 September 2022, inventory levels were 33% higher, it says.
Oscar García Maceiras, CEO, comments: “The results are explained by four factors key to our performance. Our unique fashion proposition, an increasingly optimised shopping experience for our customers, our focus on sustainability and the talent and commitment of our people. Our business model is progressing at full pace and has great growth potential going forward.”He adds: “Inditex continues to see strong growth opportunities. Our key priorities are to continually improve the product proposition, to enhance the customer experience, to maintain our focus on sustainability and to preserving the talent and commitment of our people. Prioritising these areas will drive long-term organic growth.”