Inditex sales up 11% to €16.4 billion in first nine months of 2016. The Group created over 9,000 new jobs around the world

  • Over the past twelve months, the Group has created over 9,000 new jobs around the world, one in five of which were in Spain
  • Net profit in the first nine months of the year came to €2.2bn, marking year- on-year growth of 9%
  • Inditex has 7,240 stores in 93 markets and an online presence in 41 markets, having recently launched its online sales platform in Turkey
  • Inditex rolled out mobile payment across the Group’s entire Spanish store base during the third quarter
  • During the reporting period, the Group renewed its social investment in employment and emergency relief projects with Caritas, Médecins Sans Frontières (MSF) and Entreculturas. It also entered into a new agreement with China’s Tsinghua University for a student exchange programme at Inditex’s headquarters in Arteixo (A Coruña)
  • Zara also completed the roll out of garment collection points in all its stores in Spain and extended the home collection service operated in conjunction with its online shopping platform throughout Spain including to the Balearic Islands
  • Instore and online sales increased by 16% in constant-currency terms between 1 November and 12 December 2016

Key figures

The Inditex Group’s net sales rose by 11% in the first nine months of fiscal 2016 – from 1 February to 31 October – to €16.4 billion. In constant-currency terms, top line growth was 15%, underpinned by solid same-store sales growth. Net profit totalled €2.2 billion, year-onyear growth of 9%.

This growth, coupled with the Group’s investment effort, has enabled the creation of 9,245 new jobs worldwide over the past 12 months, 1,705 of which were in Spain.

Inditex’s Chairman and CEO, Pablo Isla, underscored the importance of this figure: “The company’s growth is driving noteworthy job and value creation in our various markets, most particularly in Spain, boosted by the simultaneous growth at the Group’s headquarters. This momentum is the result of sustained investment – logistic facilities and stores - as well as the ongoing development of integrated offline-online store model”.

Key figures (9M FY16)

(€ bn)

9M 2016

9M 2015

YoY Growth

Net Sales

16,40

14,74

11%

Gross Profit

Gross margin

9,49

57,9%

8,67

58,8%

9%

 

EBITDA

3,61

3,33

8%

EBIT

2,82

2,58

9%

Net profit

2,21

2,02

9%


International expansion

The Group has continued to expand this integrated offline-online store model globally over the period. In the first nine months of the year, Inditex opened 227 stores in 50 markets, five of which were new markets (New Zealand, Vietnam, Paraguay, Aruba and Nicaragua), expanding its global footprint to 93 markets and bringing its total global store count to 7,240 stores as of October 31st 2016. In tandem, the Group launched its brands’ e-commerce platform in Turkey during the quarter, lifting its online sales reach to 41 markets see Annex I).

During the third quarter, Inditex debuted in New Zealand and Vietnam. In New Zealand, it opened a,552m2 Zara store in Auckland’s largest shopping centre, Sylvia Park. In Vietnam, it opened a 2,400m2 Zara store in the Vincom Center, in Ho Chi Min City.

Regarding its online sales platform, and in addition to the roll out in Turkey, it is worth highlighting that all the brands launched online sales in the first half in a relevant number of European markets: Bulgaria, Croatia, the Czech Republic, Slovakia, Slovenia, Estonia, Hungary, Finland, Latvia, Lithuania and Malta.

The Group opened new bricks-and-mortar stores in all geographic regions: the rate of growth in floor area continued apace thanks to the inauguration of very significant stores by all the brands. The Group added 102 new stores in Europe, 41 new stores in the Americas and 84 in Asia and the rest of the world. Moreover, all of the Group’s brands added to their store count.

In addition to the above-mentioned store openings in Auckland and Ho Chi Min City, Zara inaugurated a flagship store on Calle Compostela in A Coruña (Spain). This store is located in a building that epitomises the city’s aesthetics – characterised by broad windows and balconies – having carried out meticulous refurbishment work. The new store spans 5,000m2 divided over five floors.

In addition, just last week on 8 December Zara opened one of its most emblematic stores in the world in Barcelona. Located in Plaça Catalunya, the city’s tourist and commercial epicentre, the store has a floor space spanning more than 3,600m2 over three floors and is located in a building designed in 1931 fully restored for the city.

During the reporting period, Zara also continued to expand and refurbish some of its iconic stores. The 3,000m2 store located at Randolf Street and N. State Street in Chicago (US) reopened its doors during the quarter.

Another noteworthy refurbishment was the flagship Zara store in the Shinjuku district Tokyo, one of Japan’s most important shopping districts, which reopened to the public on 23 November. This store underwent a complete refurbishment and expansion to 2,300m2.

In September, Pull&Bear unveiled its new head office in Narón (Spain), which has officially been awarded Gold LEED certification, the most stringent sustainable building standard. To obtain Gold status, the building’s low environmental impact must be demonstrated across a range of variables, including the use of alternative energy sources, interior environmental quality, efficient water management and material selection.

In parallel, the brand continued to expand its presence. Noteworthy third-quarter Pull&Bear store openings included the brand’s new two-storey, 1,200m2 establishment in Herestraat de Groningen (Netherlands), new stores in prominent shopping centres in Azerbaijan (Ganjlik Mall in the capital city, Baku), China (in the Hopson and Qibao Vanke shopping centres in Shanghai), Mexico (in the Paseo de la Fe shopping centre in Monterey) and in the French cities of Nîmes (Cap Costieres shopping centre) and Lyon (La Part-Dieu shopping centre).

Massimo Dutti, meanwhile, also saw significant openings over the period, having unveiled its new flagship store in Barcelona, located in an architecturally important building from the late nineteenth century’s art nouveau movement, on Paseo de Gracia, one of the world’s most visited shopping streets. In this emblematic building, with 2,500m2 of floor space, the brand offers its Women, Men, Boys&Girls, Personal Tailoring and Limited-Edition Collections. These collections are showcased in an impressive interior in which novel architectural elements stand side by side some of the building’s original features that have been recovered and restored for the city.

In A Coruña (Spain), Massimo Dutti inaugurated a new store on 1 December in a building with an eye-catching façade at 1, calle Juana de Vega, at the corner of Calle Compostela, one of the city’s main shopping streets. The store’s image is true to the brand’s values – beauty, elegance, quality and sustainability - and blends in perfectly with the spirit of the city, especially by the use of glass.

Massimo Dutti continued to enter new markets, opening its first store in Finland, namely in Helsinki, at 15 Aleksanterinkatu Street, one of the Finnish capital’s oldest streets and most popular shopping destinations. In parallel, it continued to update and refurbish some of its most important establishments, such as its flagship store in the Ngee Ang City shopping centre (Singapore), one of the city’s most iconic retail complexes.

Bershka, meanwhile, also continued to update and adapt some of its most prominent stores around the world for its new Stage image, inspired by music, concerts and the backstage, already on display in its stores on Via Vittorio Emanuelle (Milan) and Oxford Street (London). Against this backdrop, the Group’s youth brand reopened its store on Nanjing Road in Shanghai (China), as well as its impressive store at 25 Gran Vía in Madrid, which houses all of Bershka’s collections in a floor space totalling 1,500m2.

Stradivarius remained particularly active during the reporting period, opening its first store in Israel, specifically in the Azrieli Centre (in Tel Aviv), as well as inaugurating a new establishment in Manchester, in the Trafford Centre (the UK’s second-largest shopping centre) and a 1,000m2 store in Belfast in the city’s centrally-located Donegall Place.

Another noteworthy development was Stradivarius’s announcement that it plans to expand its
retail offering by introducing a men’s range from 1 February 2017. The new collection will go on
sale in a selection of stores and online (www.stradivarius.com).

Oysho, the Group’s lingerie, sleepwear and gymwear brand, also entered a new market in the third quarter: Indonesia, with an opening in Jakarta. It also unveiled its new store image, which fuses Mediterranean style with new technology, during the period. The first store featuring the new image is the new two-storey Oysho store opened on Barcelona’s Avenida Diagonal. The new look is reminiscent of a showroom, accentuated by images and videos of the brand’s collections streamed on giant next-generation LED screens.

Another high-profile third-quarter opening was the new Zara Home flagship store on Avenue Louise in Brussels (Belgium). Spanning more than 1,700m2 over two floors, this store sells the brand’s full range of collections, including the Zara Home Kids collections. Zara Home similarly entered new markets, opening its first store in Estonia, specifically in the Ülemiste shopping centre (Tallinn).

Meanwhile, Uterqüe continued to expand its fashion proposition, in tandem with its new image inspired by the Mid-Century movement. In September it unveiled the new image store in Braga, Portugal with a further two openings in November in Monterrey (Mexico) and new establishments in Granada (Spain) and Lisbon (Portugal).

The new store image also shaped Uterqüe’s arrival in new markets such as the Ukraine and Poland, where it opened stores in the Esplanada Guliver shopping centre in Kiev and the emblematic Mokotov Gallery in Warsaw, respectively.

Sustainability
Recycling programme

In parallel, Zara installed garment collection points in all its stores in Spain in September. It also completed the pilot test for the at-home collection of used clothing through online deliveries; this successful initiative has since been extended to the rest of Spain including the Balearic Islands. These initiatives are part of the 2016-2020 Environmental Action Plan presented by Pablo Isla to shareholders at the Annual General Meeting. The next step in this ongoing programme is the deployment of containers throughout Zara stores in the UK, Portugal and China, among other markets.

In addition, as also announced by Inditex’s Chairman and CEO at the Annual General Meeting, Inditex enabled mobile payment in all of the Group’s stores in Spain on 1 September. Developed entirely by Inditex’s technology staff, this tool is designed to enhance the customer shopping experience and significantly simplify the registration, purchase and returns processes.

This new customer service is available within the online apps of Inditex’s eight brands and in the form of a Group-wide app called InWallet which users can download from the platforms corresponding to their operating systems. In the Inditex Group apps (corresponding to Zara, Pull&Bear, Massimo Dutti, Bershka, Stradivarius, Oysho, Zara Home and Uterqüe), the tool is featured under the name of InWallet and allows end-to-end management of online and offline purchase records, facilitating the elimination of hard-copy receipts.

Social investment in employment and social initiatives

The Group has remained highly active on the social investment front in recent months. In the employment field, Pull&Bear opened its first store under the for&from programme in Ferrol (La Coruña). This store will be managed by COGAMI (the acronym in Spanish for the Galician Confederation of Persons with Disability) through its dedicated job centre, Integratex, and staffed by five people with disabilities. Pull&Bear’s first for&from store is spearheaded by Brooklyn Beckham under the slogan ‘Jump barriers and be in the right place’.

In this same vein, Inditex renewed its collaboration agreement with Caritas, pledging to fund, via a €7.4 million contribution, this organisation’s workplace integration programmes for people at risk of social exclusion in Spain.

The employment-focused collaboration between Caritas and Inditex in Spain dates back to 2011. The programme has established its credentials as a benchmark initiative in improving the job prospects and workplace integration of people at risk of social exclusion since it was set up. Since 2011, Inditex has provided €6.5 million of funding to this endeavour, which has directly benefitted more than 4,600 people. Over 3,500 of these beneficiaries have received training that has improved their job prospects and 1,450 have found their way back into the job market thanks to integration programmes.

For the next three-year period (2017 - 2019), the employment programme will receive another €5 million of funding from Inditex and is expected to support nearly 600 training initiatives for learning a new trade or enhancing an existing one, accompanied by work experience in many instances, with the aim of improving the percentage of beneficiaries who ultimately find work.

Humanitarian aid

In November, Inditex also renewed its agreements with each of Médecins Sans Frontières (MSF), Caritas and Entreculturas, some of the main entities through which Inditex has been supporting humanitarian assistance for over a decade.

More specifically, the MSF projects, to which the Group is contributing €2.3 million in 2016, are centred on the provision of humanitarian assistance to Syrian refugees in Kilis (Turkey) and support for the mission emergency response teams in the Democratic Republic of the Congo and the Central African Republic.

Since their Framework Collaboration Agreement was signed in 2008, Inditex has earmarked over €19.1 million to MSF to fund ongoing relief work, as well as specific emergency relief efforts. These initiatives have benefitted more than 1.8 million people in 14 countries and in 28 emergency zones.

As for the Group’s work with Caritas on the humanitarian front, the specific goals include improving rural community readiness for natural disasters in Bangladesh and extending the community health and development strategy already underway in Cambodia. Since 2008, Inditex has contributed €4.3 million to these programmes, which have benefitted nearly 82,000 people.

Lastly, the renewal of the collaboration agreement with Entreculturas for the next three years implies the continued funding of education, employment and humanitarian aid programmes in Latin America, South Africa and the Lebanon that will directly benefit 165,500 people.

Entitled Educate People, General Opportunities (EPGO), the new three-year agreement, which will support 22 social projects between 2017 and 2019, will facilitate the extension of the projects initiated under the scope of the last three-year agreement (2014-16) that have brought assistance and relief to over 160,000 people (for more information about the projects carried out during the last 15 years, go to www.unmillondeoportunidades.org).

Agreement with Tsinghua University

Another noteworthy milestone in the third quarter was the new three-year agreement reached with China’s Tsinghua University School of Economics and Management (SEM). The agreement signed by the Chairman and CEO of Inditex, Pablo Isla, and the Dean of the Tsinghua University School of Economics Management (SEM), Yingyi Qian, will fund scholarships for SEM students,among other initiatives.

These scholarships will be used to support student programmes to La Coruña (Spain) for an insight into Inditex’s management strategy in areas such as fashion, logistics, environmental protection and sustainable development, among others.

After the agreement signing ceremony, 500 students from Tsinghua University SEM attended a talk given by Pablo Isla, in which he discussed the key aspects underpinning Inditex’s integrated offline and online store model.

Fourth-quarter trading update

Online and offline store sales increased by 16% in constant-currency terms between 1 November and 12 December 2016.