Inditex sales jump 11% in first nine months of 2016 as profits surge
Zara owners also note 16% growth since November 1 as Christmas campaign gets underway
Inditex, the Spanish fashion retail group that owns Zara and Massimo Dutti, turned over €16.4 billion in the first nine months of this year, up 11% on the same period in 2015, with profits growing by 9% to €2.2 billion. The company founded by one of the world’s richest men, Amancio Ortega, and now run by Pablo Isla, opened 227 stores in 50 countries from February to October. At the end of September, Inditex had a total of 7,240 stores in 93 countries.
The company, based in the small town of Arteixo, in Spain’s northwestern region of Galicia, presented its third-quarter results with the Spanish stock exchange commission on Wednesday morning, noting in a press release that it has created 9,245 jobs around the world, one in five of which – or 1,709 positions – were in Spain.
Inditex has been accused of avoiding paying taxes in Spain by locating units in low-tax jurisdictions
Inditex also said that it has introduced smartphone payment in its stores, as well as installing containers to collect used clothing in its Spanish outlets. This year saw the group open its first stores in Vietnam and New Zealand.
The company also forecast significant growth for November and December, as the Christmas shopping season begins. “Sales in stores and online at fixed exchange rates have increased 16% for the period between November 1 and December 12,” the company said in a statement.
Gross profit for the first nine months of the year was €9.49 billion, up 9% on the same period last year, making up 57.9% of sales. Operating costs grew by 10%, “mainly as a result of opening new stores and the variable costs linked to sales growth,” said the company. EBITDA was €2.8 billion, up 9% on the same period for last year.
At the end of October, the company’s net sales were €5.7 billion, the highest of any Spanish company, and a record for the company. Inditex’s debts are €60 million, offset by cash, equivalents and investments of €5.7 billion.
This year saw the group open its first Zara store in Vietnam
Last week, the Green Party presented a report to the European Parliament accusing Inditex of saving some €585 million in taxes between 2011 and 2014 by using units based in the Netherlands, Ireland, Switzerland. Inditex has rejected the accusations, saying the report contains errors and is “seriously” wrong.
The Greens’ report, based on Inditex’s own data, accuses the group of setting up units in the three countries specifically to take advantage of their low tax rates, a widespread and legal practice.
The Greens – who called their report “a plea for greater transparency by large corporations” – say that Inditex uses the Netherlands to reduce the tax bill on the royalties it pays to franchises, halving the 30% it would have paid in Spain, saving it €218 million. It accuses the company of using Switzerland to buy and sell goods at significantly lower tax rates than in Spain, while it reduces the tax on its online sales through its Irish unit.
English version by Nick Lyne.
