Inditex Group: revenue rose by 11.5% in the first half of 2017 to €11.7 billion

Inditex Group: revenue rose by 11.5% in the first half of 2017 to €11.7 billion

 

  • During the past 12 months, Inditex has generated more than 11,000 new jobs, 2,933 of which are in Spain
  • First-half revenue amounted to €11.7 billion
  • Like-for-like sales growth was 6% in the first half, and were positive across all geographies
  • The Group reported net profit of €1.37 billion, up 9% year-on-year
  • Chairman and CEO, Pablo Isla, emphasised the “strength and sustainability of our integrated offline-online store model, which continues to deliver growth, while creating value for society and the environment in which we operate, including job creation across our markets and in Spain where we are headquartered”
  • Inditex opened new stores in 35 markets during the first six months of the year, reaching a total store count of 7,405
  • The Group is currently present in 94 markets, 46 of which also have an online presence, having introduced seven of its retail concepts in Belarus and with www.zara.com scheduled to launch in India on 4 October
  • In-store and online sales increased by 12% in constant-currency terms between 1 August and 17 September 2017

Arteixo, Spain, 2017-Sep-20 — /EPR Retail News/ — Inditex Group revenue rose by 11.5% in the first half of 2017 (1 February – 31 July) to €11.7 billion, underpinned by growth across all markets and brands. First-half net profit amounted to €1.37 billion, seeing year-on-year growth of 9%. Like-for-like sales growth was 6%.

The Group also continued to generate jobs at a healthy pace, having created 11,043 new positions in the last 12 months. Of these, 2,933 jobs are located in Spain, resulting from growing teams at our headquarters.

On this point, Inditex´s Chairman and CEO, Pablo Isla, sought to underline the “strength and sustainability of the company´s integrated offline-online store model, which year after year continues to demonstrate its ability to deliver growth, while emphasising the creation of value for society and the environment, as evidenced by the notable creation of jobs, particularly in Spain, thanks to the headquarters effect”.

The Group´s strong performance, both financial, environmental and social, was recently endorsed by Dow Jones Sustainability Index (DJSI). The latest edition of the report awarded Inditex a score more than twice the industry average and commended its supply chain management, its strategy for emerging markets, its “strong corporate environmental policy and the company´s eco-efficiency goals for 2020”, as well as its “proactive” efforts to address human rights issues, an area in which Inditex is said to have implemented “bestin- class” policies, with an “approach to public disclosures on these topics that continues to exceed the industry standard”. The DJSI is the gold standard for corporate sustainability with only the top 10% of leading performers assessed against its criteria.

Key figures (first half of 2017)

(€ BILLION) 1H 2017 1H 2016 % 17/16
Revenue 11.67 10.47 11.5%
Gross profit
Gross margin
6.58
56.4%
5.95
56.8%
11%
EBITDA 2.29 2.11 9%
EBIT 1.74 1.61 9%
Beneficio neto 1.37 1.26 9%

All of the Group´s brands expanded their international footprints, adding stores in 35 countries. As a result, the Group´s global store count rose to 7,405, 113 more than at the start of the year (net of closures). Following the introduction of seven of the Group´s retail concepts in Belarus in August, and with the www.zara.com platform scheduled to launch in India on 4 October, the Group is now operating in 94 markets, 46 of which have an online presence.

The Group continued to invest in areas related to the company´s growth strategy during the reporting period, opening, refurbishing and renovating stores as well as continuously upgrading and modernising its facilities and logistics platforms. Capital expenditure for the full year is estimated at €1.5 billion.

In June, work began on the construction of a new logistics centre in A Laracha (Galicia, Spain), and in September construction started on the logistics hub planned for Lelystad (Netherlands), which will complement and support the existing central logistics platforms in Spain.

In parallel, the Group continued to roll out its used clothing collection programme in collaboration with a number of international NGOs. This programme is already fully operational in 532 stores in seven countries (Spain, Portugal, the UK, Ireland, Netherlands, Denmark and China). Planning is in progress for implementation of the scheme in another 25 countries, with pilot tests underway in some of these, including Sweden (one store in Stockholm) and Austria (one store in Vienna).

The company held its Annual General Meeting on 18 July, at which its chairman Pablo Isla provided Inditex´s shareholders with a detailed update on its growth in 2016 and the progress made on the 2016-2020 Environmental Plan presented the year before, while also announcing the expansion of the Join Life initiative – collections that stand out for their sustainable dimension – across the Group´s brands.

Progress also continued on the paperless scheme to eliminate paper tickets in online purchases, which is already a reality for online purchases in 39 markets and all purchases made in store in Spain – market in which shoppers can pay using their mobile handsets via any of the brands´ individual apps or the InWallet app, also available for Zara in the UK.

Expansion and upgrading of the sales areal

During the first six months of the year, all of the Inditex´s brands moved forward with the Group strategy of expanding, perfecting and refreshing the integrated offline-online store model. They opened flagship stores in all key geographies. Each concept also moved ahead with the strategy of continually upgrading their online and offline store images.

Notably, Zara opened an iconic flagship store in Mumbai (India) during the second quarter with a sales floor of 4,800 square metres. For the inauguration of its first street-level store in India, Zara carried out a comprehensive refurbishment and restored the emblematic Ismail Building in Hutatma Chowk Square, in the heart of the city´s shopping and historic districts.

Zara also opened other high-profile stores in the period, including the flagship store on Castellana 79, located in one of Madrid´s (Spain) busiest shopping hubs. The store, which stretches 6,000 square metres over four storeys, has obtained LEED Gold certification for its innovative eco-efficiency measures which translate into water and energy savings of 45% and 20%, respectively. Similarly during the first half, Zara opened its doors in the emblematic Silk Way shopping centre in Astana (Kazakhstan).

Pull&Bear, meanwhile, opened its first flagship store in Paris (France) in May, on Rue de Rivoli. Just a short walk from the Louvre Museum, Notre-Dame Cathedral or Pompidou Centre, the store stands out for its neoclassic façade, which during the first few days after the inauguration featured decorations specially designed for the occasion by US artist Andi Rementer.

Bershka also relocated its central Paris flagship store to Rue de Rivoli, occupying a larger space spread over two floors in which it has rolled out its Stage store image and concept.

In June, all the Group´s brands (Zara, Pull&Bear, Massimo Dutti, Bershka, Stradivarius, Oysho, Zara Home and Uterqüe) opened stores in the Puerto Cancún shopping centre in Quintana Roo (Mexico).

In July, Oysho opened its first flagship store in Geneva (Switzerland) in the central Place du Molard, a 330-square metre, single-storey store. The brand opted for a street-level establishment, maintaining the building´s original façade, the hallmarks of which are the colour white.

The Inditex Group´s underwear and gymwear brand was behind one of the Group´s most high-profile openings in the period, namely a 730-square metre, two-storey store on Via Roma, in Turin (Italy).

Zara Home opened a flagship store on West Nanjing Road in Shanghai (China) in May, as well as opening other important stores, including on Bahnhofstrasse in Zurich (Switzerland) and Kärntner Strasse in Vienna (Austria).

Massimo Dutti opened a new store on Kuznetsky Most, a two-storey building in the heart of Moscow (Russia), while Uterqüe opened a new flagship store on Paseo de Gracia de Barcelona (Spain), one of the world´s busiest shopping streets. With the second half already underway, Zara, Pull&Bear, Massimo Dutti, Bershka, Stradivarius, Oysho and Zara Home opened stores in the Dana Mall shopping centre in Minsk, marking the Group´s début in Belarus. Zara has made its entrance with a 4,000-square metre store, while the Pull&Bear and Massimo Dutti stores boast sales areas of 1,000 square metres each.

Pablo Isla visited the new stores and heard first-hand from the local teams how well Belarus shoppers were taking to the Group´s fashion propositions.

Zara and Zara Home, meanwhile, both opened stores in the Blue Mall shopping centre in Punta Cana (Dominican Republic).

The first half was particularly busy in terms of flagship renovations and expansions. A good example is the Zara Opera store, which increased its sales floor to 4,000 square metres on Boulevard des Capucines and Rue de Halevy, opposite the Garnier Opera House in Paris (France).p>

Stradivarius, meanwhile, reopened the doors of its 900-square metre flagship store on Portal de l´Ángel in Barcelona (Spain), having been comprehensively refurbished, and its renovated three-storey store in Ermou (Greece).

The city of A Coruña (Spain) also saw a number of stores being refurbished and reopened: In June, Bershka and Pull&Bear reopened in Plaza de Lugo, introducing their latest store images, and at the end of August, Stradivarius reopened its store in the same square.

Also in August, Zara White City, further expanded its sales space and reopened in London (UK), as did the renovated and expanded Zara flagship store in Nagoya (Japan), in the wake of a comprehensive refurbishment led by the brand´s architectural experts. This store, which stretches 2,300 square metres, is spread out over three floors and is known for its impressive glass façade.

In September, at the start of the second half, other landmark stores reopened, including Bershka´s biggest store in Japan at 690 square metres over four floors, in Tokyo´s Shibuya district. It will offer the complete collections from its three lines: Bershka, BSK and Man.

Zara reopened its store in the Marineda shopping centre in A Coruña (Spain), which has been refurbished and expanded to 4,000 square metres. This store has been fitted with the new www.zara.com pick-up point, which allows customers to directly collect their orders placed online through a fast and simple process. This experience is being trialled as a potential next milestone in the Inditex Group´s fully integrated offline-online store model.

The Group continued to expand this seamlessly integrated model across markets. Having entered four new markets in the first quarter of the year (Malaysia, Singapore, Thailand and Vietnam), www.zara.com is getting ready for launch in India on 4 October. Meanwhile, Oysho inaugurated its online platform in South Korea with Bershka also going live in Japan.

Commercial initiatives

It is also worth highlighting several commercial initiatives undertaken by the Group´s various brands during the reporting period. Zara unveiled a new project on its website called Shape the Invisible, an initiative undertaken in collaboration with renowned fashion schools: the Royal Academy of Antwerp, Parsons School of New York, EnsAS of Paris and Kingston University of London. The project consists of 60 garments created by up-andcoming designers from these schools, developed from past-season Zara collections.

Massimo Dutti, meanwhile, celebrated the Massimo Dutti International Show-Jumping Competition in Paris (France) as part of the Longines Global Champions Tour – Paris Eiffel Jumping, extending the brand´s close involvement with the world of horse-riding.

On 22 July, the international Oysho Yoga Tour descended on Moscow. The event took place at an emblematic location, the O2 Lounge, with spectacular views over the Red Square and the Kremlin. Moscow was the fourth stop on the Oysho Yoga Tour in 2017, after Paris, Istanbul and Tunisia.

This summer the underwear and gymwear chain also celebrated Oysho Surf´s Up, an initiative that combines surf and fitness, in line with its promotion of sports and healthy living. This initiative took place in Barcelona, Lisbon, Paris and Athens.

Automated in-store collection of online orders

The Zara store in Marineda in A Coruña (Spain) took a fresh step forward in the integration of the Group´s offline and online stores by introducing an automated order delivery point where shoppers can pick up orders placed online at their convenience.

The prototype is articulated around an optical barcode reader which scans the QR code or accepts the PIN codes received by customers when they place orders online.

In just a few seconds, the system delivers the order to a mailbox platform. Behind the platform, a dynamic robot moves through a shaft 8m tall by 2.5m wide with capacity to handle 700 packages simultaneously, as you can see here.

Pull&Bear this year became the main sponsor of the Pull&Bear Pantín Classic Galicia Pro, Spain´s most prominent surfi ng competition, which takes place in early September. Pull&Bear developed a special collection for young men and women which went on sale exclusively in the pop-up store placed on the Galician beach of Pantín from the end of August and on the brand´s online platform (www.pullandbear.com).

Pull&Bear´s sustainability commitment was clearly on display at this event: the Pantín Eco Surf initiative gave new life to the waste generated during the championship. A network of Pull&Bear eco-points for the collection and sorting of waste was installed along the beach and in its vicinity. The materials recovered were treated by certifi ed handlers who were tasked with generating new materials such as recycled fi bres from the waste.

These initiatives are part of the brand´s Circular Economy policy which also crystallised in the new Join Life collections and Massimo Dutti has joined Zara and Oysho in this sustainable clothing initiative. The idea behind the Join Life label is to distinguish the garments that stand out for the use of best textile processes in terms of environmental and sustainability aspects, either by using recycled materials or water- or energy-saving processes.

Giving back to the community

Inditex was recently named the most sustainable company in the retail industry for the second year in a row by the Dow Jones Sustainability Index (DJSI).

The company scored a total of 78 out of 100 points, putting it well head of the industry average of 30. Specifically, Inditex obtained the highest scores in the retail sector in the following categories: Supply Chain Management; Strategy for Emerging Markets; Environmental Management Policy and Systems; Contribution to Society and Philanthropy; and Human Rights.

The ranking, which is published by the S&P Dow Jones Indices and the sustainability investing specialist RobecoSam, commended Inditex for its leadership and efforts to “proactively address one of the [retail] industry´s most controversial issues: human rights”. “As a result, Inditex has managed to establish best-in class human rights policies, due diligence processes and comprehensive risk assessments”, notes the report, as well as highlighting the fact that its “approach to public disclosure on these topics continues to exceed the industry standard.”

As for its environmental record, the assessment underscores the reduction in water and energy consumption, “in line with its strong corporate environmental policy and the company´s eco-efficiency goals for 2020”. It also highlighted the “strong emphasis” being placed by the company on waste reduction with its Closing the Loop programme, bringing Inditex closer to its “ambitious goal to eliminate all waste from its own activities by 2020”.

for&from projects

Turning to some of the Group´s community work during the first half it is worth highlighting the inauguration of two new for&from establishments, stores which employ people with physical, psychological or learning disabilities. The store openings in Leganés and Llagostera (Spain) bring the initiative´s total store count to 13.

More specifically, Tempe opened its first for&from store in Madrid (Spain) during the first quarter, in the Sambil Outlet Madrid shopping centre, in collaboration with Prodis. Oysho, meanwhile, opened its second for&from store in the Catalan town of Llagostera (Spain), in collaboration with Moltacte.

As a result of these two openings, Inditex now has 13 for&from stores, which employ 150 people and are operated in collaboration with expert NGOs.

The Red Cross

Inditex donated 411,982 garments to the Red Cross in Spain to help combat poverty and social exclusion. The contribution was split into several donations. The donation, is worth €1.6 million and included shoes, accesories and garments from the women´s, men´s and kids collections. The organization´s staff take charge of giving the donated clothes to the people in Spain who are particularly vulnerable and needy people.

2H17 trading update

Between 1 August and 17 September 2017, sales in local currencies in stores and online have grown 12%..

As ratified at the Annual General Meeting held on 18 July, the Company will pay an final ordinary and bonus dividend totalling €0.34 per share (before tax) on 2 November 2017, thereby completing the €0.68 per share dividend declared against 2016 earnings.

Contact:

Tlf: +34 981 185 400
Fax: +34 981 185 544
comunicacion@inditex.com

Source: Inditex

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