Inditex posts 8.3% rise in sales and net profit of €2.5 billion in 2014
Positive performance by the parent company of Zara boosts the Spanish stock market
Inditex, owner of fashion retail chains such as Zara, Bershka and Massimo Dutti, increased its 2014 sales by 8.3% to €18.1 billion, the company reported on Wednesday.
Net profit over the period rose 5.2% to over €2.5 billion, confirming that the world’s largest fashion retailer by sales continues to hold a dominant market position.
Inditex has also announced an incentives plan for 70,000 employees with more than two years with the group
Earlier this week, rising Inditex share prices pushed the fortune of founder Amancio Ortega past the €60 billion mark. The Spanish stock market welcomed the positive news on Wednesday with a 2% gain.
The Galicia-based giant has also announced an incentives plan for 70,000 employees who have worked at an Inditex firm for more than two years. The company will share 10% of the annual increase in profit, up to a maximum of 2% of total profit.
At the end of fiscal year 2014 (February 2014 through January 2015), the Spanish fashion group had 6,683 stores and 137,057 employees in 88 markets, representing 343 new establishments and 8,740 additional workers.
Of these new jobs, 1,800 were created in Spain.
Investment in 2014 was higher than expected: while the goal was €1.35 billion, Inditex spent close to €1.4 billion, besides an extraordinary investment of €400 million to purchase a building in New York’s SoHo neighborhood, where a new Zara store is scheduled to go up.
Inditex also said that 2015 has so far been very good, with a 13% rise in store sales at constant exchange rates from February 1 through 14.
Spanish market loses ground
Zara continues to lead group sales by a huge margin. Last year the brand represented 64% of all sales, or nearly €11.6 billion. But it was Zara Home that posted the fastest growth at 21%, followed by the underwear chain Oysho, whose sales advanced 18% from 2013.
Broken down by markets, Spain continued to lose ground, representing 19% of the business, a 0.7% drop from 2013. The rest of Europe now accounts for 46% of the market, with Asia coming in second with 21.1% of sales.
This year, Inditex is planning to spend another €1.35 billion on 420 to 480 new stores, although it will also close down between 80 and 100 small establishments, which will become part of larger shops.
Also this year, Zara will launch online sales in Taiwan, Hong Kong and Macao.
Pablo Isla gives himself a raise
The chairman and CEO of Inditex, Pablo Ilsa – who took over from founder Amancio Ortega in 2011 – earned €7.93 million in 2014, a 24% rise from his 2013 salary. Of that amount, €3.35 million represented his fixed salary while the rest was bonuses and variable pay.
The Inditex board received €9.56 million, a 19.5% increase from 2013, according to the company’s filings with the market watchdog, the CNMV.
Amancio Ortega, founder of Inditex and owner of a nearly 60% stake in the company, received €100,000 as a member of the board, the same amount he made in 2013.
