Inditex to step up expansion with online offerings and
outlets
By The Financial Times
Inditex
said its retail stores worldwide had seen buoyant sales growth in the start of
the financial year, and vowed to accelerate its
international expansion through the launch of online offerings and
by opening as many as 500 high street outlets.
The
Spanish group’s upbeat outlook impressed analysts and investors, who lifted
Inditex shares by 4.2 per cent to €107.45 in afternoon trading. The bounce came
despite a set of annual results that showed the group had increased profits by
less than 1 per cent in 2013, in line with expectations.
Anne
Critchlow, analyst at Société Générale, said the group’s results contained “two
really pleasing things” – a rise in the dividend payout ratio from 58 per cent
to 64 per cent and continued strong sales growth at its more than 6,300 stores
during the first part of the new financial year. “Underlying trading is going
really well, and that gives the market hope that there could be some upside
risk to current estimates [for the year 2014],” she said.
The
owner of Zara, Massimo Dutti, Bershka and five other retail chains is trying to
bounce back from a difficult year in
2013. Inditex, which ranks as the world’s largest textile retailer by sales,
said net profits for the full year were almost unchanged from 2012 at €3.8bn,
on sales that rose 5 per cent to €16.7bn. Like-for-like sales – which strip out
the effect of new store openings – rose 3 per cent over the previous year.
The
sales increase, however, was cancelled out by adverse currency effects. With a
presence in 87 countries, Inditex is heavily exposed to emerging market
currencies, many of which have fallen against the euro over the past year.
The
group’s gross margin was virtually unchanged from 2012 at 59 per cent.
Inditex
is pushing hard to bolster its online sales presence. This financial year the
group has already launched a Zara website in Greece and is due to open Zara.com
in Romania in the coming weeks, and in South Korea and Mexico later in 2014.
The latest launches will take the number of countries where Inditex has an
online presence to 27.
“We
regard Inditex as one of the few beneficiaries of the ongoing, rapid channel
shift to online from store-based apparel sales,” analysts at Citigroup noted on
Wednesday, predicting that online sales would only have a “minimal”
cannibalisation effect on the group’s high street stores.
Ms
Critchlow said the group’s expansion into online sales represented “one of the
fastest rollouts we have seen in the sector”.
Inditex
said it would propose a 10 per cent increase in the annual dividend to €2.42.