Business

Zara owner Inditex sees profit boosted by online expansion

Woman shopping at Zara Image copyright MARC ALEX
Image caption Inditex owns Zara along with brands such as Pull&Bear, Massimo Dutti and Bershka.

Profit jumped at Zara owner Inditex in the first half of the year as the firm opened new stores and invested in online.

The world's biggest clothing retailer posted net earnings of €1.26bn (£1.1bn) in the six months to 31 July - up 8% on the same period last year.

Sales jumped from €9.4bn to €10.5bn, an increase of 11%.

The group's clothes can now be bought online in around 40 countries, it said.

Inditex operates eight brands in 90 countries including Pull&Bear, Massimo Dutti and Bershka.

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Chairman and chief executive Pablo Isla emphasised the firm's investment in technology, saying the firm had expanded its online stores to 11 new countries in the period.

It also launched mobile phone payment in all its Spanish stores, with the objective of "extending the service to other countries".

This will encompass online apps for all of its brands and a specific app for the whole group called InWallet.

Mr Isla said: "Both our online and bricks-and-mortar stores are seamlessly connected, driven by platforms such as mobile payment, and other technological initiatives that we will continue to develop."

Image copyright MIGUEL RIOPA
Image caption Inditex chairman and chief executive Pablo Isla said the firm was investing heavily in its online stores

Tom Gadsby, an analyst at Liberum, said the firm's "online drive" was important.

"I expect over the years they may find they don't have to open as many stores to maintain their strong growth rate as the online channel will become increasingly important," he said.

"And while Zara is available in many of the territories in which they operate [online], most of their other brands aren't readily available outside Europe online.

"So there is a big opportunity there for them to expand online into new territories."

The company also said it had benefited from steady economic growth in Spain, where Inditex gets about a fifth of its sales.

That country's clothing market grew at an average of 3% in the three-months to the end of July, according to the Spanish statistics agency.

All of the group's brands increased their international presence during the period, with 83 new stores opened in 38 countries.

In a call with analysts, it said it would open 6-8% of new store space over course of the year.

The firm's strong performance sets it apart from European rivals H&M and Next, which have blamed unseasonal weather for below-forecast results this year.

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