18 July 2017
Pablo Isla highlights solid, sustainable and integrated growth as key to the Inditex of the future
- The Group's chairman and CEO, Pablo Isla, reviewed Inditex's performance in 2016 at today's Annual General Meeting
- Mr. Isla defined Inditex as a company “focused on its people, devoted to creative talent and underpinned by an integrated offline-online store model”
- As part of its international expansion, Zara will launch its online sales platform in India this October. In addition, this August the Group's brands, including Zara, Pull&Bear, Massimo Dutti, Bershka, Stradivarius, Oysho and Zara Home will open their first stores in Belarus
- The commitment to sustainability all along the value chain was strengthened in 2016 with implementation of Inditex’s Closing the Loop initiative, demonstrating its commitment to the concept of the circular economy. In addition, the group launched sustainable clothing collections by both Zara -Join Life- and Oysho -Weare the Change-. These initiatives are to be adopted by the other Group brands in 2018
- The Group's earnings performance last year has enabled us to pay a total dividend of €0.68 per share, marking growth of 13.3% year-on-year and 89% in the last five years
At the Annual General Meeting held today at the head offices in Arteixo, Spain, Inditex's shareholders approved the Group's performance in 2016, a year in which its points of sale surpassed the 7,200 mark in 93 countries and 41 online markets. Group revenue reached €23.31 billion, underpinned by growth in all the regions in which it does business, while net profit amounted to €3.16 billion. These results paved the way for payment of a dividend of €0.68 per share, marking growth of 13.3% year-on-year and 89% in the last five years.
In his speech to shareholders, Inditex's Chairman and CEO, Pablo Isla, underlined the company's “solid and sustainable growth” in 2016 and defined Inditex as a company “focused on its people, devoted to creative talent and underpinned by an integrated offline-online store model”. Mr. Isla also highlighted Inditex's “sustainable growth strategy”, which permeates all the links in its value chain, and the Group's ability to generate “value for society”.
As part of the ongoing international expansion of its integrated store model, Inditex's Chairman and CEO confirmed that Zara will launch its online store in India this October. In addition, the Group expects to open its maiden Zara, Pull&Bear, Massimo Dutti, Bershka, Stradivarius, Oysho and Zara Home stores in Belarus in August.
“A solid growth model”
The Group's ongoing international expansion, borne out in the flagship stores launched across its geographies by Inditex's brands in 2016 and H1 2017, set the backdrop for Mr. Isla's explanation of the Group's “solid growth model”. This model has yielded topline and same-store sales growth of 69% and 37%, respectively, over the past five years, with positive results in all regions.
Inditex's Chairman and CEO also sought to underline the Group's commitment to investment, flagging capex of €1.43 billion in 2016 to put the total at “over €7 billion during the last five years”. Of this total, “more than €1 billion has been earmarked to technology upgrades” over the same timeframe.
On the innovation front, he highlighted the deployment of RFID technology, whose rollout across the Zara store base was completed in 2016 and is ongoing at Massimo Dutti and Uterqüe at present. This technology is expected to be introduced across the rest of the Group's retail concepts in 2018.
Meanwhile, investment in logistics in the last five years has topped the €700 million mark, enabling “the development of very advanced high-tech areas known as multi-shuttle systems” at the Bershka platform in Tordera and the distribution centre in Arteixo, La Coruña. This technology is enabling “more efficient management of dispatch times”.
Sustainable growth strategy articulated around the circular economy concept
Mr. Isla also took advantage of the Annual General Meeting to detail “Inditex's sustainable growth strategy”, which in 2016 reached all stages of the value chain thanks to the Group's Closing the Loop strategy for reusing and recycling textile products.
This initiative is the embodiment of the Group's strategic commitment to the circular economy concept, and in its first year has enabled the collection of over 7,100 tonnes of garments, footwear and accessories thanks to special containers placed in the company's stores, offices and logistics platforms.
These end-of-life initiatives are being carried out in collaboration with highly respected bodies such as Caritas, the Red Cross, Oxfam and China Environmental Protection Foundation in 534 stores and eight markets (Spain, Portugal, UK, Ireland, Netherlands, Denmark, China and Sweden). The plan is to increase the number of collection points and countries involved going forward.
This commitment is also evident in the use of more sustainable raw materials and more sustainably made fabrics, which formed the basis of novel collections such as Zara Join Life and Oysho Weare the Change. “A selection of more than 44 million particularly sustainable garments featuring special labels”, explained Mr. Isla, who announced today that “all of Inditex's brands will join this initiative”.
On the sustainability front, Inditex's Chairman and CEO referred to the strategic commitment to eco-efficiency, informing the company's shareholders that “a total of 4,519 stores, more than 71%, already meet these criteria, which deliver average savings in terms of water and energy consumption of 40% and 20%, respectively relative to conventional stores”.
Multiple cultures, creative talent and equal opportunities
At the end of the year, Inditex had 162,450 employees representing 99 different nationalities worldwide. A team characterised by “creative talent, self-imposed high standards, the ability to work as a team and a strong customer focus”, in the words of Pablo Isla, who went on to stress that “Inditex's relationship with our people is defined by diversity, equal opportunities and career development”.
In glancing back at the year's key figures, Pablo Isla noted that the positive trend in the creation of stable and quality jobs had continued last year. In the past year, the Group created 9,596 jobs, 2,480 of which were Spain. As a result, Inditex has generated nearly 53,000 jobs worldwide in the past five years, 10,000 of them in Spain, with some 80% of its employees on permanent contracts.
Inditex paid its employees over €535 million from its 2016 profits in addition to their base salaries. Of this total, €493 million was paid in bonuses and commissions. A further €42 million relates to phase two of Inditex's extraordinary profit-sharing plan which was paid out last April to those approximately 84,000 employees who had been working for the Group for at least two years at 31 March 2017.
Finally, Mr. Isla described how the Group creates value for the communities in which it does business, quantifying Inditex's global tax contribution in 2016 at €5.6 billion. Of this sum, €1.62 billion was paid in Spain, where the Group is headquartered, with a further €870 million paid in indirect taxes in the country.
He also put a number on the direct beneficiaries of Inditex's community programmes in the last five years - over 7 million - and outlined the main humanitarian aid, social well-being and educational programmes and projects supported by Inditex's contributions in the past year.
In addition to approving Inditex's performance in 2016, the company's shareholders ratified the reappointment of José Arnau Sierra as a proprietary member of its Board of Directors. It also approved the distribution of a total dividend of €0.68 per share; 0.34 was paid on 2 May 2017 as an interim ordinary dividend, and 0.34 will be payable on 2 November 2017 as the final ordinary and bonus dividend.