Zara owner Inditex’s omnichannel strategy helps boost sales

Clothing retailer Inditex has posted record first-quarter sales and a rise in profits helped by the retailer’s push of stitching together its online and physical businesses.

The fashion retailer’s online business, which accounts for 12 per cent of its net sales, and expansion plans have contributed to its robust first quarter sales of €5.927 billion ($10.18 billion), up 5 per cent from last year’s €5.654 billion ($9.56 billion).

Net profit amounted to €734 million ($1.26 billion), up more than 10 per cent in the first quarter of 2018. The company’s net cash position increased by 9 per cent to €6.66 billion ($11.44 billion).

The retailer, which owns the brands Zara and Pull & Bear, said its in-store and online sales showed a 9.5 per cent increase in local currencies between May 1 and June 7 – up from the 6.5 per cent in the previous corresponding period.

“The figures demonstrate the solidarity of the company’s model, whose profitability and cash flow generation continues to grow owing to the group’s commitment to customer-driven quality fashion,” said Pablo Isla, Inditex’s chairman and outgoing CEO.

Isla underscored the strong momentum in the digital transformation of the integrated store and online sales platform and sustainability as key pillars of the company’s strategy.

Last month, the retailer has named chief operating officer Carlos Crespo as its new chief executive to spearhead a bigger push into e-commerce.

Crespo will continue in his existing position until his appointment as CEO becomes effective in July, when he will begin taking some of the responsibilities currently held by executive chairman and current CEO Pablo Isla, the company announced.

The appointment of Crespo, who oversaw the integration of Inditex’s online and bricks-and-mortar stores, puts an emphasis on the retail giant’s digital efforts amid changing consumer habits.

Last year, Isla announced all products from all Inditex’s brands will be made available online by 2020, including markets where it does not have any stores.

Other than Zara and Pull & Bear, the world’s largest clothing retailer also sells the brands, Massimo Dutti, Bershka, Stradivarius, Oysho and Uterque across its network of almost 7,500 physical shops. It also operates online in 49 markets.

Isla also said all of the group’s brands will be adopting an integrated stock management system by 2020 in all the countries where there is a physical store presence.