Zara India reports drop in profit
In this article (5)
Fashion retailer Zara India has reported a 13.4-per-cent drop in net profit over the last financial year, reflecting increased competition and a drop in demand during the period.
The loss came despite a 17.7 percent increase in sales over the year to ₹1438 crore (US$208 million), which suggests the company has been heavily discounting to maintain stock turnover.
Two years ago, Zara India saw a 40-per-cent drop in profits after ruthlessly slashing prices to beat competitors.
The brand opened two new stores in the territory and expanded its presence to a total of 10 Indian cities during the last financial year.
“The numbers could reflect a dip in same-store sales growth,” noted an Indian retail industry commentator. “Also during the year, India saw no major new net mall additions in large cities for a brand such as Zara to open add more stores”.
A spokesperson for Zara’s local partner Trent maintained that the primary challenge to the brand’s faster expansion is the availability of high-quality retail spaces that could be expected to generate reasonable sales throughput.
Questions & Answers
Q.What was Zara India's net profit decrease percentage last financial year, and what were the main reasons for it?
What was Zara India's net profit decrease percentage last financial year, and what were the main reasons for it?
Zara India reported a 13.4-per-cent drop in net profit. This was due to increased competition and a drop in demand experienced during the financial period.
Q.Despite a profit drop, did Zara India's sales increase or decrease over the last year?
Despite a profit drop, did Zara India's sales increase or decrease over the last year?
Zara India saw a 17.7 percent increase in sales over the last year, reaching ₹1438 crore (US$208 million). This suggests the company heavily discounted products to manage stock.
Q.How many new stores did Zara India open last financial year, and in how many cities do they now operate?
How many new stores did Zara India open last financial year, and in how many cities do they now operate?
Zara India opened two new stores during the last financial year. The brand has now expanded its presence to a total of 10 Indian cities.
Q.What is the primary challenge to Zara's faster expansion in India, according to their local partner?
What is the primary challenge to Zara's faster expansion in India, according to their local partner?
Zara's local partner, Trent, stated that the main challenge to faster expansion is finding high-quality retail spaces. These spaces need to be capable of generating reasonable sales throughput.
Reader pulse
Zara India's profit drop: sustainable strategy?
17,266 votes so far