Zara Parent Company'S Profit Rose 12% In The First 9 Months Of Rejuvenation.

2019 is the year when fast fashion brands collectively "ebb". When Forever21, Topshop and other fast fashion companies were looking for a way out, Inditex, the parent company of Zara, unexpectedly handed in a satisfactory answer.
On December 11th, Inditex group released its first 9 months' earnings report as at the end of October. Data show that during the reporting period, the group's sales rose 7.5% to 19 billion 800 million euros, gross profit margin was 58.2%, net profit increased by 12% to 2 billion 720 million euros.
Does the performance of giant Inditex indicate that fast fashion will collectively escape?
Inditex "rejuvenation"
According to public information, Inditex group was founded in 1975, mainly engaged in the design, production and sale of clothing, shoes and hats, glasses, perfume, jewelry and other products. The group owns fast fading brands Zara, Bershka, Pull&Bear, Massimo Dutti, Stradivarius, Oysho, Uterque and Zara HOME. With the popularity and global expansion of Zara, Inditex gradually surpassed H&M, GAP and other fashion retail giants, becoming the largest fashion group company in the world.
According to Inditex's latest earnings report, as of the first nine months of October 31st, Inditex Group sales grew 7.5% to 19 billion 800 million euros, gross profit margin was 58.2%, net profit increased 12% to 2 billion 720 million euros. Among them, the third quarter profit increased by 14% to 1 billion 200 million euros.
In the year when the fast fashion environment was sluggish, Inditex group went upstream. Compared with this year, the performance of Inditex was not satisfactory last year. The same period last year showed that the sales volume of the group was 18 billion 400 million euros, up 3% from the same period last year, which is basically the same as the 3% growth rate in the first half of 2018.
Pablo Isla, group chairman, said that the growth of its performance was mainly due to the innovation of its brand products and the high quality service and experience provided by online and offline stores under the support of digital technology.
As the core brand, Zara has taken on the main driving force of growth. Since the beginning of this year, the brand has been expanding its product range, including make-up and perfume. As of October 2019, the number of Zara brand stores was 2139, compared to 118 in the same period last year, but the number of stores in Zara Kids and Zara Home declined.
Data show that in the third quarter of this year, all brands opened new stores in major cities or completed renovation of existing stores. As of the end of the reporting period, Inditex group's all brands of e-commerce services have been extended to more than 200 markets worldwide, and there are 7486 stores online.
For 2019 full year forecast, Inditex expects sales to grow 4% to 6% over the same period.
Betting is the core of the Inditex group. Despite its late entry into the electricity business, Inditex has begun to focus on developing online businesses in recent years. As of November 2018, Zara's global e-commerce website has opened up 106 new markets, and Zara has an online platform in 202 markets worldwide. In September and October this year, Zara launched new online stores in South Africa, Philippines and Ukraine.
In order to better develop the digital business, Inditex group has set up a new building for the Zara electricity supplier department. The Arteixo headquarters occupies 63 thousand square meters, and equipped with the photographic and video production facilities needed by the Department. The latest eco-environmental technology has been adopted in building methods and subsequent waste and energy management.
It is worth noting that Inditex is not the only way to return to spring. In the first 9 months of August 31st, the H&M Group recorded an increase of 11% to 171 billion 61 million kronor, while net profit increased 1% to SEK 9 billion 231 million. The third quarter growth is the first time H&M group has realized profit growth after its eight consecutive quarterly decline.
　　 Can fast fashion "collectively escape"?
Although the two fast fashion giants are doing their best, the overall trend is far from being out of danger.
In November 26th, the Beijing News reporter was informed that Teri List-Stol, chief financial officer of GAP group, said at the performance meeting that Old Navy was about to quit China in 2020. GAP group said that the future Old Navy will focus its business on the North American market in order to maximize efficiency.
According to foreign media, last year, the US fast fashion brand Forever21, who withdrew from China and started bankruptcy protection since the beginning of this year, is facing new difficulties. The material submitted to the court in October 15th is expected to have a net cash flow of $19 million 100 thousand in the 13 week ended December 21st and annual revenue of $720 million. Due to lower than expected earnings, some of the lenders and owners were weakened, or forced to seek sale.
In its prime, Forever21 has more than 800 stores in 57 countries.
In addition, the bankruptcy petition filed by the Topshop parent company Arcadia in the United States has been approved and will close the 11 US Topshop and Topman stores.
The same is for fast fashion. Why is "the same person different life"? Some analysts emphasize that in the face of fierce market competition, the products of Forever21 and Topshop are obviously lack of difference and originality. Especially in the wake of the awakening of consumers' concept, no new and cheap products have faded out of the sight of the main consuming people.
Shoes and garment industry analyst Ma Gang told reporters that the market environment has changed, the new channel represented by the electricity supplier has risen, while some fast fashion brands are lacking in this opportunity. In addition, some fast fashion brands have become slower in innovation and become divorced from consumers.