Zara owner Inditex sees 41% jump in online sales

The owner of Zara and Massimo Dutti, Inditex, saw online sales revenue grow by 41% in 2017, according to a trading update.

In 2017, Inditex invested €1.8bn (£1.5bn) in further developing its integrated stores and online model and upgrading its technology Specifically, the rollout of radio-frequency identification (RFID) technology (used to identify and track tags on products and stock levels with the use of radio signals) has been said to improve flexibility and response times by integrating stores and online inventories.

Some 10% of the company’s total sales are now online and 12% of the total in countries in which it has an online presence.

Inditex Group’s net sales rose by 9% in FY17 (1 February 2017 – 31 January 2018) to €25.34bn (£22.45bn), underpinned by growth in all of the geographic regions in which it has a presence. In local currencies, the growth of store and online sales was 10%. Like-for-like sales rose by 5%, with positive growth across all geographic areas and in all concepts.

Earnings before interest and taxes (EBIT) reached €4.3bn (£3.8bn), 7% higher than in 2017, 12% in local currencies. Net profit totalled €3.37bn (£2.98bn), signifying a year-on-year growth of 7%.

The board of directors also plan to submit a motion to increase the dividend by 10.3% to €0.75 (£0.66) per share at the next AGM.

The store count at year-end 2017 had increased by a net 183 stores. This included the opening of 524 stores in 58 markets, offset by 341 smaller units which were replaced or absorbed by larger stores. As part of its ongoing plan to focus on larger units in prime locations, the group enlarged 144 flagship stores and refurbished a further 122 stores. The year-end store count stood at 7,475.

So far this year, store sales have increased by 9% in local currencies between 1 February and 11 March 2018.

EBITDA increased by 4% from fiscal 2016 to €5.3bn (£4.6bn) – 8% in constant-currency terms, excluding the impact of movements in exchange rates. Net profit amounted to €3.37bn (£2.98bn), marking year-on-year growth of 7%.

The chairman and CEO of Inditex, Pablo Isla, described it as a year of “solid growth”, and highlighted “the unique strength of our integrated stores and online model and its significant growth potential”.

He said: “The prescient investments made in technology and logistics in recent years, coupled with space optimisation, mean the company is well placed for continued growth across all its markets.”