13 December 2017
Inditex’s net sales climb 10% to €17.96 billion in the first nine months of fiscal 2017
- The Group continues to develop its integrated offline-online platform, rolling out same-day delivery in six cities and next-day delivery in six markets, including Spain, France, the UK and China.
- Inditex is deploying automated in-store pick-up points for online orders.
- Store count reached 7,504 with a footprint in 94 markets, having opened its first stores in Belarus in the third quarter.
- The Group’s retail brands opened new stores in 52 different markets during the reporting period, including in the US, Vietnam, China and Turkey.
- The Group’s online presence reached 45 markets, following the launch of www.zara. com in India. Bershka’s online platform also went live in the US.
- Net profit for the first nine months of the fiscal year registered growth of 6% to €2.3 bn.
- The Group renewed its community investment agreements for emergency relief with Médecins Sans Frontières (MSF).
- The third quarter was marked by the tenth anniversary of the Framework Agreement between Inditex and IndustriALL Global Union; a meeting took place with the International Labour Organization (ILO) to monitor the joint projects underway.
- Store and online sales increased by 13% in local currencies between 1 November and 11 December 2017.
The Inditex Group’s net sales rose by 10% in the first nine months of fiscal 2017 – from 1 February to 31 October –, on top of the growth of 11% recorded in the same period of 2016, to €17.96 billion. Net profit was €2.3 billion, with year-on-year growth of 6%.
The Group’s achieved a strong operating performance in the period. It made further progress on the global roll-out of its fully integrated store and online model, whilst also continuing to bolster its strategy of opening and refurbishing flagship stores on the world’s busiest shopping streets and optimising its sales floor area.
Commenting on the online-offline model, the company’s Chairman and CEO, Pablo Isla, highlighted the “increasingly integrated management of the platform, which is translating into value-added customer services”. Isla highlighted services suchs as same-day delivery, -already on offer in Madrid, London, Paris, Istanbul, Taipei and Shanghai-, next-day delivery, -available in Spain, France, the UK, Poland, China and South Korea- and the rollout of automated in-store pick-up points for orders placed online. Also, remarked the simultaneous offline and online transition between collections, both between seasons and every fortnight when the various collections are refreshed.
In the current reporting period, the Group continued to expand its integrated online-offline sales platform and its sales floor area increased across all geographies. During the first 9 months, Inditex opened 212 stores in 52 markets, increasing its global footprint to 94 markets, with the inauguration of a 4,000 square metre flagship Zara store, as well as Massimo Dutti, Pull&Bear, Bershka, Stradivarius, Zara Home and Oysho stores, in Minsk (Belarus) last August.
Inditex opened 74 stores in Europe, 48 in the Americas and 90 in Asia and the rest of the world, with all of the Group’s retail formats adding to their store counts.
As for the online platform, Inditex’s reach currently extends to 45 markets in the wake of the inauguration of Zara’s online operations in India in October. During the 9M17, Zara also launched online sales in Malaysia, Singapore, Thailand and Vietnam.
The period was also marked by the inauguration and expansion of multiple Zara flagship stores worldwide, including: the iconic 6,000 square-metre establishment at Castellana 79 in Madrid (Spain); Zara’s first street store in Bombay, which occupies 4,800 square metres in the emblematic Ismail Building; the new 2,200 square-metre Zara Cloud Nine store in Shanghai (China); and a 4,500 square-metre space in Hanoi (Vietnam). The last two flagship stores opened to the public in November.
Additionally, Zara also opened new stores in in the US, in California, New Jersey, Michigan and, most recently in Florida. In Canada, Zara recently opened stores in Toronto, Calgary and Halifax. Finally, Zara opened numerous high-profile stores in the Chinese cities of Harbin, Shenzen, Hangzhou, Chongquing, Yiwu and Shanghai.
Turning to store expansion and refurbishment, Zara reopened stores in the Marineda shopping centre in A Coruña (Spain) -equipped with one of the Group’s in-store pick-up points for online orders-; its flagship store in Seoul (Korea); Westfield Century City shopping centre in Los Angeles (US); Forum des Halles in Paris (France); Smáralind shopping centre in Reykjavik (Iceland); Avenida de Santa Fe in Buenos Aires (Argentina); in the Wanda and Sky Mall shopping centres in Shanghai (China) and on Corso Garibaldi in Regio Calabria (Italy).
These came on the heels of other flagship reopenings earlier in the year such as the refurbished 4,000 square-metre Zara Opera store in Paris (France) and the 2,500 squaremetre Zara Nagoya store in Japan.
Bershka, meanwhile, reopened its flagship store in the Tokyo’s Shibuya district on 15 September. The refurbished store has been updated to portray the brand’s newest image, embodied by the Stage concept, across 1,000 square metres over four floors which house the Bershka, Bsk and Man collections.
Bershka also opened high-profile stores in Bielefeld (Germany), Harbin (China), Bogota (Colombia) and the Mall of Egypt in Cairo (Egypt), a shopping centre in which Massimo Dutti, Oysho, Pull&Bear, Stradivarius and Zara Home also recently opened new stores.
Bershka also increased its online reach, launching its e-commerce platform in South Korea, Japan and the US. The US launch was accompanied by a pop-up store in the heart of New York’s SoHo district which is going to remain open until the end of December, showing the brand’s autumn-winter collections.
Massimo Dutti, Pull&Bear and Stradivarius opened their first stores in Vietnam, in Ho-Chi Minh City, while Zara Home inaugurated its maiden stores in Armenia and the Czech Republic, a market in which Oysho, also extended its footprint to Honduras during the quarter.
During the period, Massimo Dutti opened high-profile stores, in Baku (Azerbaijan); Hangzhou (China); Goyang (South Korea); Cracow and Wroclaw in Poland; and in the Torre Manacar shopping centre in Mexico D.F.
In addition, it reopened its stores in Ermou in Athens (Greece) and in the Sturegalleriaen in Stockholm (Sweden), following significant expansions. In addition, inaugurated a 1,500 square-metre flagship store in Valencia (Spain) and another one in Zurich (Switzerland) on 1 December. Massimo Dutti also updated its image at its store on Massira Al Khadra in Casablanca. The new image is true to the brand’s hallmark values: elegance, quality, sobriety and sustainability.
Pull&Bear, opened major stores in Moscow (Russia); Graz (Austria); the Loom shopping centre in Bielefeld (Germany); the Yiwu City Life Square shopping centre in Yiwu (China); Bogota (Colombia), Puebla (Mexico); Yogyakarta (Indonesia); Ra’anana (Israel); Lule (Portugal); Kiev (Ukraine); and two new stores in Istanbul and another in Bursa (Turkey). Pull&Bear also reopened and expanded existing stores including Porto Pi, Palma de Mallorca (Spain); on Île de France (France) and on Via Independenza in Bologna (Italy).
In addition to expanding its online platform to South Korea, Oysho opened a significant number of new stores in the quarter, including in the Wharf IFS shopping centre in Chongqing (China); the La Felicidad shopping centre in Bogota (Colombia); in the cities of Patras (Greece); Goyang (South Korea), Genoa (Italy), Moscow (Russia) and Turkey, where it opened three new stores between Istanbul and Bursa. It also expanded its Spanish flagship stores on Barcelona’s Paseo de Gracia and on Logroño’s calle San Antón.
Zara Home, welcomed its customers to new stores in Riad (Saudi Arabia); Las Condes in Santiago de Chile (Chile); and the Chinese cities of Hangzhou and Shenzhen. Other new establishments included those added in Goyang (South Korea); Cairo (Egypt); and Diezerstraat in Zwolle (Netherlands).
The home fashion chain also opened two stores in Poland, three in Turkey and new establishments in Punta Cana (Dominican Republic), Moscow (Russia) and Madrid (Spain). Zara Home refurbished and expanded its flagship stores on Grosse Bleichen in Hamburg (Germany) and in the W Shopping centre in Brussels (Belgium).
Stradivarius, meanwhile, opened high-profile stores in Poland - specifically in the Arkady Wroclawskie shopping centre in Wroclaw -, Motril (Spain), Palermo (Italy), Tangier (Morocco), Beirut (Lebanon), Puerto Vallarta (Mexico), Serris and Villeneuve la Garenne (France), the Binjiang Paradise Walk shopping centre in Hangzhou (China) and in the Hilltown shopping centre in Istanbul (Turkey).
Stradivarius reopened its flagship store in the emblematic Plaza de Lugo in La Coruña (Spain). This store, which spans over 600 square metres, reflects the brand’s renewed style and introduces genuine ash timber for the first time to complement the industrial characteristic of Stradivarius’s Cube stores.
During the quarter, Stradivarius also extended its store in Casa Fortuny in Villafranca del Penedés (Spain) and its premises in the Luz del Tajo and El Rosal shopping centres in Toledo and Ponferrada (Spain), respectively.
It is also worth highlighting the refurbishment work undertaken at the chain’s stores on Avenida de Viya in Cadiz (Spain) and in the Arcadia shopping centre in Warszawa (Poland).
Uterqüe continued to expand and renew its store network during the quarter, opening major stores in Moscow (Russia), Wroclaw (Poland) and Riad (Saudi Arabia). Uterqüe also entered new markets this year, including Romania for the first time. In parallel, the brand continued to execute on its plan to roll out its new store image to flagship stores such as the one located on calle Rodríguez Árias in Bilbao (Spain).
The third quarter was once again marked by a plethora of commercial initiatives by all the chains. Zara collaborated with the prestigious photographer Steven Meisel on the images for Zara’s autumn/winter 17/18 women’s collection, inspired by all things British with a touch of the 90s, complete with classic pieces re-imagined for a feminine and sophisticated look. Zara also expanded the scope of its Join Life collections, launching men’s and baby ranges.
Massimo Dutti participated in the TMall platform’s Super Brand Day, creating a lookbook featuring the celebrity, Bosco Wong, and organising a catwalk fashion show.
Pull&Bear celebrated Marc Márquez’s victory in the MotoGP world championships by launching the second Marc Márquez X Pull&Bear collection, for which design the six-time world champion gets actively involved. This brand also launched its first complete line of women’s beauty products (eyeliners, eyeshadows, lip balms, face masks, nail polish, etc.) under the Hey Beauty! trademark.
Oysho went ahead with its Yoga Tour, organising events in Madrid and Istanbul in October. More than 3,000 people participated in the yoga master class given on Madrid’s Paseo del Prado.
The brand also launched its first ski collection, with premium finishes and performance fabrics. The ski jackets, made using a special waterproof, breathable fabric with added features hidden in the hood, are the star feature. The use of Thermolite® technology makes the more lightweight pieces warmer to wear.
Bershka launched its Misunderstood collection in collaboration with Italian singer Fedez, with 41 platinum and 20 gold releases under his belt. The collection, which went on sale on 6 October, and was available online and in select stores, drew from the retro 90s look and featured highly colourful garments inspired by the worlds of sports and tattoos. This partnership translated into a collection which represented the rap scene, as well as the brand’s youthful spirit.
Zarahome.com celebrated its tenth anniversary on 29 October and launched a their new image on Instagram. Uterqüe participated once again in the Gallery Weekend initiative which took place in Madrid from 14 - 16 September and in Barcelona during the weekend of 29 September - 1 October. The goal is to introduce the general public to contemporary art and promote the Madrid and Barcelona art scenes on the international stage. Uterqüe also extended its collaboration with the world of art by hosting exhibitions in its flagship store on Paseo de Gracia in Barcelona (Spain).
In line with its strategic goal to achieve a circular economy model, the Group continued to roll out its used-clothing collection programme in collaboration with various international NGOs. This programme is already fully operational in 562 stores in eight countries (Spain, Portugal, the UK, Ireland, Netherlands, Denmark, China and Sweden). Planning is in progress for implementation of the scheme in another 22 markets, with pilot tests underway in some of these, including Austria (four stores) and Canada (13 stores).
The Salta project
The Salta project, which is celebrating its tenth anniversary this year, was set up in France in 2008 - under the name of Jeunes [Youths] - with the aim of training and providing in-store work experience to people at risk of social exclusion due to serious difficulties in accessing the job market.
The chairman and CEO of Inditex, Pablo Isla, met with some of the ‘graduates’ of the programme to mark the occasion. The event was attended by members of the last group of participants and representatives from the prior 20 groups. To date the programme has helped 780 people to access work across the Group’s stores, factories and logistics centres; 67% of these youths are still working at the company and 7% have already been promoted internally.
Today the project is up and running in 12 cities under the name of Salta [Leap]: Barcelona, Madrid, Paris, Milan, Athens, Hamburg, Warsaw, London, Lisbon, Mexico City, São Paolo and New York.
Some 1,259 company employees have participated in the project as teachers, tutors or mentors. The endeavour has also boasted the participation of celebrities such as the French football side’s coach Raymond Domenech, the former cyclist Bernard Hinault, the mountain climber Edurne Pasaban, the painter Lita Cabellut and the dancer Nadia Adame, who shared their own experiences on how to overcame tough challenges. More than 40 charities have collaborated with the initiative, helping with the selection process, as well as training and subsequent monitoring of the participants once on the job.
Elsewhere, the Group has also continued to foster its 'for&from' programme this year, having opened a new 'for&from' Oysho store in Llagostera (Spain), which is being managed by the NGO, Moltacte. The new store is staffed with five people with different kinds of disabilities. With this newest establishment, there are now 13 stores within Inditex’s ‘for&from’ programme, which employs 151 people with different forms of disability.
Inditex, IndustriALL and the ILO
Inditex also celebrated another important tenth anniversary during the quarter: its Global Framework Agreement with IndustriALL Global Union, which represents over 50 million workers in 140 countries. During an event that took place at the Madrid head offices of the Economic and Social Council, the chairman and CEO of Inditex, Pablo Isla, and the general secretary of IndustriALL, Valter Sanches, reviewed the key progress made under this pioneering agreement, aimed to protect and promote labour conditions throughout the entire supply chain.
During his presentation, Pablo Isla stressed that the work performed together during the past decade “ratifies the Global Framework Agreement as one of the best tools for continuing to ensure and encourage best labour practices among the companies that supply the garment industry”. He noted that universal entitlement to the freedom of association and right to collective bargaining were the cornerstones of this effort.
Pablo Isla also met with the Director-General of the International Labour Organization (ILO), Guy Ryder, in October to review and reinforce the various projects for which the two entities are collaborating with the overriding aim of enhancing labour conditions at all levels of the garment sector value chain.
During the meeting, Pablo Isla emphasised "Inditex’s firm commitment to the ILO conventions, on which our Code of Conduct for Manufacturers and Suppliers is based, and to the United Nations Sustainable Development Goals, especially those related to decent work". He went on to highlight the projects on which Inditex is already underway, in countries such as China, Turkey, Cambodia, Brazil and Indonesia.
In November, Inditex renewed its agreements with Médecins Sans Frontières (MSF for its acronym in French), one of the key entities through which Inditex channels its concerted investment in humanitarian assistance.
Inditex has renewed its commitment to the medical and humanitarian relief work carried out by MSF with Syrian refugees in the Turkish province of Kilis and to the Emergency Desk operated from MSF’s headquarters in Spain. Thanks to this annual agreement, which consisted of a total contribution of €2.3 million, Inditex’s support will extend to the Al Salamah Hospital in the Azzaz district of the Syrian province of Aleppo. The collaboration also covers care for Rohingya refugees in Bangladesh and a programme for combating severe malnutrition in children in India.
The agreement was signed by Pablo Isla and the managing director of MSF Spain, Joan Tubau, at Inditex’s headquarters in Arteixo (La Coruña), at a ceremony also attended by the president of the medical-humanitarian organisation in Spain, David Noguera.
Fourth-quarter 2017 trading update
Online and offline store sales increased by 13% in local currency terms between 1 November and 11 December 2017.