Zara owner Inditex posts big profits despite Shein’s rise

On Wednesday, Inditex, the parent company of Zara and the world’s largest fashion retailer, reported a record-breaking net profit for the first quarter, despite increasing competition from the online fashion retailer Shein.

Inditex, which also owns brands like Bershka, Massimo Dutti, and Pull&Bear, has delivered strong financial results, with its share price climbing in recent months despite global inflation and geopolitical challenges.

For the quarter ending April 30, Inditex’s net profit soared to 1.3 billion euros ($1.4 billion), marking an 11 percent rise compared to the same period last year. This figure represents an all-time high for what is typically a lower-earning quarter. Additionally, sales increased by seven percent, reaching 8.2 billion euros.

These profit and sales figures were in line with predictions made by analysts surveyed by financial data firm FactSet.

“Inditex maintained a very robust operational performance thanks to the creativity of its teams and the strong execution of its fully integrated business model,” the company stated in its results announcement.

The company also reported continued strong sales at the start of the second quarter, with a 12 percent increase from May 1 to June 3 compared to the previous year.

Looking ahead, Inditex plans to invest 900 million euros annually in 2024 and 2025 to expand its logistics capabilities, anticipating strong future growth opportunities.

Led by Marta Ortega, daughter of the company’s billionaire founder Amancio Ortega, Inditex has seen its share value increase by more than 40 percent over the past year.

However, Inditex, along with other retailers like H&M, faces growing competition from Shein, an online fast-fashion platform that is reportedly planning a multi-billion-pound listing on the London stock market.