Zara's parent company releases Q3 revenue data

On Dec 11, Zara's parent company, Inditex published its third-quarter report. The company's revenue for the first three quarters grew by 7.1% year-on-year to 27.4 billion euro, while net profit increased by 8.5% to 4.4 billion euro, and gross margin improved by 4 basis points to 59.4%.

In the third quarter, sales amounted to 9.36 billion euro, falling short of market expectations of 9.51 billion euro. This performance, slightly below expectations, was primarily influenced by two external factors. A significant portion of Inditex's sales is denominated in euros, directly affected by the strengthening of the dollar and the weakening of the euro. Additionally, severe flooding in southern Spain has impacted the company's local business.

However, it is noteworthy that Inditex's gross margin of nearly 60% gives it a considerable competitive advantage in the mass apparel market compared to major rivals. Uniqlo and H&M reported gross margins of 53.9% and 51.1%, respectively. Even sports brands targeting the same mass market, such as Nike, Adidas, and Under Armour, have gross margins ranging from about 40% to 50%.

In the third-quarter financial report, Inditex announced a two-year investment plan for logistics center construction, starting in 2024, with an annual investment of 900 million euro, totaling 1.8 billion euro. This large-scale investment has three core objectives, to expand logistics capacity, enhance supply chain efficiency, and ensure the highest sustainability standards.

At the same time, Inditex plans to achieve an annual store area growth of approximately 5% from 2024 to 2026 and continue optimizing store operations. The strong growth of its online business is expected to positively impact future performance, although sales in 2024 will decrease by 3% due to foreign exchange effects.

Additionally, Inditex continues to advance its sustainability strategy, including investments in the AI-driven startup Epoch Biodesign to achieve textile circularity. Furthermore, its sustainable innovation center has collaborated with over 350 startups.