Sales of Inditex, owner of Zara, rebound to pre-pandemic highs

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Zara store. Shutterstock.

Zara fashion brand owner Inditex rebounded with a second quarter profit of € 850 million on Wednesday as sales surpassed pre-pandemic levels, overtaking Swedish rival H&M.

Sales of the world’s largest fashion retailer rebounded and slightly exceeded the level seen before the pandemic as most stores reopened and people rushed to renew their wardrobes after store closings imposed for curb the spread of the virus.

The Spanish company’s second-quarter net profit was higher than the 214 million euros ($ 181.14 million) recorded during the same period in 2020 and 4% higher than the 2019 profit.

Its Swedish rival H&M, the world’s second-largest fashion retailer, said on Wednesday sales rose less than expected from a year ago in the three months through August, and remained below levels before the pandemic.

Although fashion retailers are recovering from the impact of the pandemic, the recent spread of the Delta variant of the coronavirus means that some restrictions have been reintroduced, while many industries face supply issues due to a shortage of shipping containers and other bottlenecks.

Inditex said sales accelerated during the May-July period to reach € 6.99 billion, up 7% from the same period in 2019, as buyers started trading again. buy clothes for summer social events to take advantage of their new freedoms made possible by vaccination campaigns.

Second-quarter sales are in line with the 7.02 billion euros expected by analysts polled by Refinitiv.

Inditex said in-store and online sales at constant exchange rates between August and the first week of September were 22% higher than a year ago and 9% higher than during the same. period of 2019.

Analysts said consumers recently shifted their spending to focus on fashion workwear as major cities slowly return to normal and most lockdowns are lifted, a trend that is benefiting large fashion retailers. such as the Inditex brands.

During the pandemic, Inditex strengthened its digital retail platform and closed its small outlets around the world in favor of the expansion of flagship stores capable of functioning as mini distribution centers.

Inditex said 99% of all of its stores have reopened and currently operate 6,654 stores globally compared to 7,337 stores a year ago.

Inditex online sales grew 36% in the first half of the year compared to the same period in 2020, when mobility restrictions in key markets like Britain, Germany and France forced buyers to buy from home.

The company expects online sales to exceed 25% of total sales this year and will launch a men’s sports collection in late September under the name Zara Athleticz.

Earnings before interest, taxes, depreciation and amortization (EBITDA) increased 109% to 3.1 billion euros, close to the 3.4 billion recorded in 2019.

By Corina Pons; editors: Inti Landauro, Keith Weir and Jane Merriman.

Learn more:

H&M lags behind Zara-Owner Inditex in the race to regain lost sales

When the fast-fashion giants announce quarterly sales on Wednesday, Inditex is back to pre-pandemic levels, while H&M still has a way to go.


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