Retail

Zara’s Parent Company Shares Positive Outlook As It Prepares For Online Expansion

Zara’s parent company, Inditex SA, said it would continue its plan to expand online as it reported positive first-half results.

Inditex, whose other brands include Pull&Bear, Massimo Dutti, Bershka, Stradivarius, Oysho and Uterqüe, revealed that sales at stores open for at least a year rose 4 percent in the six months to July 31 and that it expected comparable sales growth of 4 percent to 6 percent in the second half, according to The Wall Street Journal.

Zara also has up to 10 percent year-over-year growth, making its performance stronger than many of its rivals.

The good news sent shares up nearly 4 percent in afternoon trading in Madrid. Overall, however, the stock is down more than 17 percent over the past 12 months.

Chairman and CEO Pablo Isla added that the company’s recent announcement that it will sell products from all of its brands on the web won’t have a significant impact on costs.

“We want to make our fashion collections available to all of our customers, wherever they are in the world,” Isla said. “Even in those markets which do not currently have our brick-and-mortar stores.”

The full online catalog will be operational by 2020. Inditex also noted that it will be rolling out in-store pickup of online orders to all 96 countries where it operates a physical store.

The move comes as Zara — the original fast fashion innovator — is finding itself under fire from online-only companies that target their young and hip customer base, including Boohoo.com and Missguided. As a result, Zara has teamed up with tech firms to rethink its sales models and stock handling as it makes a bid to remain competitive in an increasingly crowded market.

So far, its move to digitization has shown some early signs of strength. Online sales were up 41 percent in 2017 and represented 10 percent of Zara’s net sales.

Isla added that the move to enable its stores to ship online purchases is helping to boost full-price sales, with net profit increasing 3 percent year-over-year to €1.4 billion in its fiscal first half. Net sales were up 3 percent to €12 billion and, in local currencies, sales rose 8 percent.

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