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Zara | Inditex (Spain)

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Zara is the best-known brand in the portfolio of Inditex, the Spanish fashion group which is now the world's biggest fashion retailer by both revenues and global presence. Despite the recent economic downturn, the group has continued to go from strength to strength, opening between 250 and 600 stores a year. Its key strength has long been the superb efficiency of its manufacturing and distribution system, able to deliver a succession of new designs into stores at a speed which initially left competitors stumbling. The group overtook European rival H&M by revenues at the beginning of 2006, and finally topped Gap in 2009. Inditex was already bigger than Gap by store numbers. By early 2018, the group's portfolio housed 7,475 outlets worldwide. Zara is by far the most widespread brand, accounting for almost a third of outlets and two-thirds of revenues. It is supported by a collection of other store concepts including Bershka, Massimo Dutti and Pull & Bear.


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Zara is the core brand within the Inditex group, and its international flagship with more than 2,213 stores in 93 markets. Its stores are bigger too, representing just under two-thirds of the group's total sales floor space. Positioned above H&M in style, Zara offers a wide range of stylish designer fashion for men, women and children, but at low prices. Most of the group's manufacturing is managed inhouse, much of it at a vast HQ in northern Spain, and as a result the group's greatest strength has long been its skill at turning around its own lower-priced interpretations of new designs from the likes of Gucci or Armani in record speed, regularly beating the major labels into the stores. The company is able to get new designs from the drawing board into its shops in as little as two weeks, and also new clothes at least twice weekly to every one of its stores around the world. Some stores are even resupplied daily with new stock.

As a result, the chain has been able to attract shoppers from both the high and low end of the market. It is the group's most important brand by far, still contributing two-thirds of total revenues and as much as 70% of operating profits. Retail sales at the main Zara fashion chain were €15.4bn in 2016, generating EBIT of €2.8bn. The brand also offers a range of home soft furnishings and accessories under the Zara Home label, which now has its own retail estate of around 552 standalone stores in 53 countries. That sub-brand contributed another €774m of revenues in its own right.

Zara is accompanied within Inditex by another six brands, at least five of which also have an extensive international profile. The group's second most valuable brand is Bershka, offering everyday street fashion for a younger market. It now has more than 1,081 stores in 70 countries. Revenues broke through the €1.0bn barrier in 2008, and reached €2bn in 2016. Another brand, Massimo Dutti, offers more elegant designer clothing through 765 stores in 69 countries. Sales topped €1bn for the first time in 2011, rising to €1.6bn for 2016. Pull & Bear, also generating sales of €1.6bn in 2016, targets a youth market with more casual stylish sports wear, and an estate of over 973 outlets in 68 countries. Stradivarius is the newest billion-Euro brand, with 994 stores and sales of €1.3bn for 2016. It offers a more sophisticated range of casual wear for a younger women's market. Lingerie and underwear chain Oysho generated €509m from 636 stores. The smallest of the main brands, and the only one with fewer than 500 stores is accessories chain Uterque (with just 78 outlets).

Although it has a presence in most major global markets, and in 93 countries overall, Inditex's business is still focused primarily on Europe, where it still generates over 60% of revenues. Spain, in particular, still dominates its geographical presence, with 1,787 outlets in early 2017, contributing 17% of group revenues. The next biggest markets by store numbers are China (620 stores in 2017), the Russian Federation (541 stores), Italy (377), Mexico (360), Portugal (337) and France (296). Most outlets are owned and managed by the company, with only around 830 operated by franchisees.

Despite its geographical and economic importance, Germany is currently one of Zara's smaller territories. Until recently, outlets there operated as a joint venture between Inditex and local retail and mail order group Otto. In 2006, Inditex increased its holding in Zara Deutschland to 78%, and is expected to build its presence in the country further. However, there were only 137 outlets there by early 2017, and only 110 in another major European market, the UK. The US still has only 81, almost all Zara, with just 3 Massimo Dutti.

Also in 2006, the group also took full control of Zara Russia in 2006, previously a license operated by Group Stockmann of Finland. Inditex expanded its presence in Asia during 2006, including the opening of its first outlets in mainland China. It entered Latin America during 2007, followed by the Ukraine, South Korea (in a partnership with Lotte Group) and Egypt in 2008. In September that year, the group's 4,000th store opened in Tokyo. In 2010 it opened its first Zara outlets in India in a joint venture with Tata Group, along with Kazakhstan and Bulgaria. Australia and South Africa and three other countries joined the fold in 2011. In 2012, the first stores opened in Georgia, Bosnia, Ecuador, Armenia and Macedonia.

The group is also developing an extensive presence online, launching its first ecommerce service for the Zara fashion brand in Germany, the UK, France, Italy, Spain and Portugal in 2010. That offering has been gradually rolled out in other countries, including the US and Japan, during 2011, China and Canada in 2012. The group is also launching online stores for its other brands, including Pull&Bear, Massimo Dutti, Bershka, Stradivarius, Oysho and Uterque. By the beginning of 2017, the group offered online shopping in more than 30 markets.


Inditex delivered another year of solid growth in 2014, though the rate of increase has slowed. Net revenues for the year ending January 2015 rose 8% to €18.12bn, while net income climbed 5% to €2.5bn. Like-for-like sales excluding new stores grew 5%. Spain is still the biggest market by far, accounting for 19% of revenues in ye 2015. The US contributed 14%.

Revenues topped €20bn for the first time for the year to Jan 2016, at €20.9bn, an increase of over 15%. Net profits grew by the same margin to €2.9bn, even after significant investment in additional outlets and staff.

For the year to 2017, topline grew by another 12% to reach €23.3bn. Net profit was also up 10% to €3.2bn, and the group was sitting on net cash reserves of over €6bn.

The group reported another year of higher sales for the period to Jan 2018, but growth slowed significantly, especially in physical retail. Revenues rose 9% to €25.3bn, while profits were up 7% to €3.4bn. However overall like-for-like growth halved from 10% in 2016 to 5%. The star performer, though, was online where sales jumped by more than 40% to €2.5bn.


Having trained as a tailor, Amancio Ortega Gaona set up his first textile manufacturing business, Confecciones Goa (his initials in reverse), in 1963 in partnership with his first wife, Rosalia Mera. They began producing lingerie and nightdresses for sale to local retailers in and around the town of A Coruna in Galicia, northern Spain. The range of garments steadily expanded and the Ortegas established their own retail outlet in 1975. This was originally to be named Zorba, after the film Zorba The Greek, but they changed the name to Zara to avoid confusion with A Coruna's local bar, already called Zorba.

Over the next ten years, the chain gradually spread across the rest of the country. Industria de Diseno Textil (or Inditex for short) was created in 1985 as a holding company for what had by then become a network of different manufacturing and retail businesses. A year later the group began winding down its third-party manufacturing to concentrate on the Zara chain. At the time, it was considered to be a comparatively down-market brand by Spanish shoppers, but this attitude changed as the business established a presence in other countries. In 1988, Zara opened its first outlet outside Spain, in Portugal, followed by the US and France in 1989 and 1990. A series of other countries followed, initially one or two each year; then from 1998 onwards between four and eight every year. The first UK stores opened in 1998, the first in Germany in 1999; Italy in 2001.

In the mean time the group also diversified its offering by launching or acquiring alternative store formats. Pull & Bear was launched as the group's second retail brand in 1991, and Inditex also acquired a controlling stake in Spanish designer fashion label Massimo Dutti. (It bought out the outstanding shares five years later). The portfolio was swelled further with the launch of Bershka in 1998, and the purchase of Stradivarius in 1999. Inditex went public in 2001, the same year that Oysho launched. Zara Home was introduced two years later. Newest addition to the fold is Uterque, opened in 2008. Since 2001, the group has embarked on an ambitious store opening strategy, averaging an outlet a day. Ortega's long-time collaborator Jose Maria Castellano resigned towards the end of 2005, and was replaced as deputy chairman and CEO by Pablo Isla.

Last full revision 5th April 2017

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