- Inditex recorded net sales growth of 14% in the 1Q of 2017 to €5.6 billion
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- The Group generated over 10,668 new jobs over the year, 2,242 of which were in Spain.
- In April, the company distributed €42 million among 84,000 employees as phase two of its extraordinary employee profit-sharing plan.
- In total, between commission, incentives and bonuses, the Group has distributed €535 million to its staff over the past year.
- The reporting period was marked by strong business performance.
- Sales growth in constant currency was 12.5%.
- Net profit rose by 18% to €654 million.
- Zara’s online platform went live in Malaysia, Thailand, Singapore and Vietnam during the first quarter.
Arteixo, Spain, 2017-Jul-17 — /EPR Retail News/ — Inditex recorded net sales growth of 14% in the first quarter of 2017 (1 February – 30 April) to €5.6 billion, underpinned by a solid business performance. Sales growth in constant-currency terms was 12.5%. Net profit amounted to €654 million, up 18% from the first quarter of 2016.
Job creation
The Group has generated some 10,668 new jobs over the past twelve months, 2,242 of which were in Spain. In April, the company distributed €42 million to around 84,000 employees with at least two years’ service in its stores, manufacturing facilities, logistics platforms, brands and subsidiaries as phase two of its extraordinary employee profit-sharing plan.
The plan is equivalent to a payout of 10% of the annual growth in net profit, which equated to €28 million in 2016. The Group subsequently increased this by a further €14 million.
During the 2015/2016 extraordinary profit-sharing plan, the Group has now distributed €79.4 million to its staff. In addition, the Group has announced a new profit-sharing plan with similar characteristics for 2017/2018.
This €42 million payment comes in addition to the €493 million paid out to the entire workforce in the form of performance-based bonuses and commission in 2016. These combines with the fixed wages, that totalled €3,10 billion in 2016.
Key financial indicators
| (€ M) | 1Q17 | 1Q16 | YOY CHG |
|---|---|---|---|
| Net sales | 5,569 | 4,879 | 14% |
| Gross profit Gross margin |
3,249 58.2% |
2,834 58.1% |
14% |
| EBITDA | 1,113 | 955 | 17% |
| EBIT | 834 | 705 | 18% |
| Net profit | 654 | 554 | 18% |
Meanwhile, the company continued to invest in growth through the constant modernisation and renewal of its stores and facilities. This investment continues to be framed by social responsibility and environmental criteria. The opening of the new Stradivarius offices in the Vallés area of Cerdanyola (Barcelona) during the quarter stands out as a key moment during the quarter. The brand’s design and central services staff have been moved to the new facility.
Sustainability is the bedrock of this 32,000 square metre facility: the façade features automated features to enhance energy efficiency. Indigenous plants requiring little water have been planted in certain areas and are watered using a system that reuses rainwater. These efficiency measures will reduce energy use by 45% and water use by 30%. In addition, the use of locally sourced recyclable materials and the building’s heating system should qualify the building for LEED Gold certification.
The Green Building Council has awarded its LEED Gold certification to Oysho’s headquarters in Tordera during the first quarter.
In addition, in the months of May and June, the company announced plans to build two new logistics hubs over the coming months, one in the Dutch town of Lelystad and the other in A Laracha in Galicia, Spain. These hubs will complement and support the Group’s existing central logistics platforms in Spain. Investment in these new facilities will exceed €150 million.
Growth across all regions
All of the Group’s brands increased their international presence, expanding their integrated physical and online store platforms. Four new e-commerce markets were added during the quarter, with Zara launching online operations in Thailand, Malaysia, Singapore and Vietnam. In parallel, the Group continued to expand and refine its presence in its 93 operating markets, ending the period with 7,385 stores. Zara is due to launch online in India during the second half of the year.
The first quarter was marked by a notable number of flagship store openings. In Madrid, Zara opened a four-storey, 6,000 square metre store at Castellana 79, in the heart of the iconic Azca business and retail district. The new store stands apart for its eco-efficiency credentials, as it has been fitted with the latest innovations which will deliver savings in water and energy consumption of 45% and up 20%, respectively. As a result, it holds LEED Gold certification.
Massimo Dutti opened the doors of a two-storey establishment of over 1,000 metres in central Moscow (Russia) which houses the brand’s men’s, women’s and limited-edition collections. This new flagship store, located on Kuznetsky Most street, combines innovative architectural features with the historic building’s original features.
Zara Home, meanwhile, also opened important new stores, including 600 square metre flagship stores on the busy Bahnhofstrasse in Zurich (Switzerland) and on Kärntner Strasse in Vienna (Austria), the latter located in a building opposite the opera house which has been refurbished to preserve its original aesthetics and structure. In May, this brand also inaugurated a flagship store on Shanghai’s West Nanjing Road (China).
Uterqüe opened a particularly special store on Barcelona’s Paseo de Gracia (Spain), one of the world’s most important shopping streets. The store’s aesthetic is based in Uterqüe’s new store image, which is understated yet sophisticated. It features a vertical garden in the middle of the store which provides freshness and vibrancy.
In May, Zara opened the doors of its new flagship store in the Ismail Building in Mumbay (India). In inaugurating this new store, which boasts a total floor area of around 4,800 square metres, the company’s in-house architectural team conducted extensive research work in order to restore one of the city’s oldest and most emblematic buildings, while introducing all of the eco-efficiency measures being rolled out by the Group in order to deliver energy and water consumption savings of 30% and 50%, respectively, making it a candidate for LEED certification in the process.
Pull&Bear also opened in May its first Parisian flagship store on Rue de Rivoli, just a few metres away from the Louvre Museum, the Notre Dame Cathedral and the George Pompidou Centre. The establishment, which spans 550 square metres, stands out for its imposing neoclassic façade which was decorated with illustrations specially designed for the occasion by American artist Andy Remeter for the first few days after the store’s inauguration.
Oysho, the Inditex Group’s underwear and gymwear brand, opened over a dozen new stores during the quarter and in May it opened its new two-storey, 720 square metre flagship store on Vía Roma, one of the most emblematic streets in Turin’s historic district.
In parallel, the Group continued to expand and/or refurbish some of its most iconic stores. In Paris (France), Zara reopened its emblematic store in the Opera district; the establishment now spans 4,000 square metres in total and presents impressive façades looking on to Boulevard des Capucines and Rue Halevy, opposite the Garnier Opera House.
Paris was also home to the reopening of the Bershka flagship store on Rue de Rivoli, where it has unveiled its new Stage store image and concept in a bigger space in the heart of the French capital.
Stradivarius, meanwhile, reopened the doors of its renovated 900 square metre flagship store on Portal del Angel in Barcelona (Spain). During the reopening, Inditex’s youth brand also commemorated the milestone of reaching 1,000 stores worldwide.
Commercial initiatives
All of the brands launched novel commercial initiatives in early 2017. Massimo Dutti launched #DressedinDutti, a new Instagram initiative which enables shoppers to purchase from the content shared on this social network. For the launch of the new hashtag and web section, the brand used Italian influencer Diletta Bonaiuti as ambassador. #DressedinDutti is available in 13 countries, including Spain, the US, Russia, the UK, Mexico and Italy, among others.
Oysho, meanwhile, extended its support for sporting events. In Lisbon, the brand was responsible for the design and production of the official T-shirt for the local women’s race, Corrida da Mulher, and in Rome it was the Local Major Partner for the Race for the Cure charity run for the third year running. In a new development, this year Oysho organised the official practice runs for both events, which started from the Oysho Galleria Colonna and the Oysho Rua Garret stores in the case of the Rome and Lisbon races, respectively.
Zara also embarked on a range of initiatives, including the Exotic Allure, Blooming and Mustard’s Garden collections and the limited-edition online TRF collection called Oil On Denim.
The world of motorbike racing inspired Pull&Bear once again this quarter with the brand not only announcing its official sponsorship of Marc Márquez and the Honda HRC motor-racing team for 2017 and 2018, but also launching the first collection designed by the rider himself along with the brand’s creative teams. The Marc Márquez x Pull&Bear collection is on sale in a selection of stores around the world and on the brand’s website www.pullandbear.com
Elsewhere, in order to mark the 56th edition of the Salone Internazionale del Mobile furniture trade fair in Milan, Zara Home presented La Grande Illusione, a pop-up installation in the Piazza San Babila store designed in collaboration with the British set designer and art director Simon Costin.
For this project, the Zara Home team and Simon Costin worked jointly to develop a concept that would bring the brand closer to the world of art and design by means of a spectacular montage in which the brand’s 2017 spring-summer collections take centre stage.
This collaboration was rounded out with the input of another talented British artist: photographer Tim Walker participated in the initiative with a series of six photographs in which the dresses imagined by Simon Costin come to life through his lens.
Stradivarius also had an active start to the year. One of the most noteworthy initiatives was the celebration in May of the third edition of its Summer Expedition, an annual trip which brings a group of international influencers to top destinations, in collaboration with Vueling. Specifically, the brand brought 16 influencers to Marrakesh (Morocco), where it presented its spring/summer 2017 collections and they enjoyed three activity-filled days.
Giving back to the community
On the social and environmental responsibility front, the company’s for&from programme attained a new milestone when it opened a new Tempe store in the Sambil Outlet shopping centre in Leganés (Madrid, Spain), which is managed by people with disabilities.
The store has a headcount of 18 people and a floor area of 500 square metres. It sells the shoes and accessories made by Tempe for all of the Group’s brands (Zara, Pull&Bear, Massimo Dutti, Bershka, Stradivarius, Oysho, Zara Home and Uterqüe) and is managed by the Prodis Foundation, an organisation devoted to integrating people with disabilities into the workforce.
With this new addition, Inditex has opened 12 for&from stores, which employ 144 people, in collaboration with specialist charitable organisations.
2Q17 trading update
Sales in constant currency terms increased by x% from 1 February to 3 June 2017.
Inditex has scheduled its Annual General Meeting for 18 July. The Board of Directors will ask the company’s shareholders to approve the payment of an overall dividend from 2016 profits of €0.68 per share, €0.34 of which was already paid out on 2 May 2017; the balance would be paid on 2 November 2017.
Source: Inditex
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