How and why two Zara collections launched the ensemble performance this year

Ricardo Gómez Acebo Botín is the nephew of Ana Botín, president of Banco Santander, so his wedding, which took place recently outside Madrid, gathered all the Spanish high society and naturally made headlines in magazines, among other things. And For guest appearances – fancy hats, stunning dresses and (most notably) the fact that some were wearing Zara.

The presence of two specific clothes of the Spanish brand turned out to be so unexpected, curious, and seemingly worthy of comment (for the story they cost 129 and 36 euros, respectively), that they became the subject of Elle magazine. However, its results Inditex, the company that owns Zara stores, A few days ago, it showed that the two appearances weren’t random occurrences at all.

Inditex, which started in any charming Galician town far from the Spanish capital, reported a 13% jump in first-quarter sales, which followed a 17.5% increase for the full year of 2022. The increase helped push its market value to €105 billion, still below its peak. in 2017, but it is the highest level since the epidemic of which, Zara stores have emerged as one of the biggest winners in the retail space.

Although it still sells “basic” clothing like T-shirts, the company has tried Distinguishes itself from the Swedish H&M And to evade the disposable “fast fashion” label by becoming a chic party wear designer. Last year, American singer Selena Gomez wore a blue Zara suit worth 150 euros to Britney Spears’ wedding. Inditex’s sales reflect this shift.

the Oscar García Maceras, who took over as CEO last year after former chairman and CEO Pablo Isla stepped down, said Zara had not implemented a new strategy. “However, we are always striving to improve quality, style and design,” he told the Financial Times from Inditex’s headquarters in Artixo.

Patricia Cifuentes, analyst at Bestinver, said: “In the past you couldn’t wear Zara to a wedding.

But now with all the influencers and celebrities wearing Zara, you can. Inditex reinforced the idea that Zara sells fashion.”

In the UK, for more than a decade now, the tabloids have been watching closely Zara clothes that Kate Middleton chooses to wear from time to time, now Princess of Wales. However, the change in consumer perceptions is much more recent.

In part it’s about Marta Ortega, daughter of founder Amancio Ortega and non-executive chairman of the company since last year, who has helped launch premium collections with partners like New York designer Narciso Rodriguez and South Korean brand Ader Error.

Another factor is the increasing use of catwalk style images on the site. “Customers can see the clothes in situations they would never see in the store,” said a member of the Zara team online. “E-commerce is the best advertisement we can get.”

And all this while Zara manages to maintain its ability to move faster than its competitors. Having its own factories Galicia and suppliers in Portugal and Morocco, She can create runway-inspired outfits and have them available in stores in as little as three weeks.

Another analyst was more cautious, however, commenting that a major risk over the next two years is that inflation will continue to drive up operating costs, but clients suffering from the effects of the cost-of-living crisis will resist higher prices.

Competitors such as Cos, Other Stories and Arket – all owned by H&M – as well as Spain’s Mango face the same challenge. But Inditex’s gross margin last quarter rose to 60.5% of revenue, 10 percentage points higher than H&M.

Inditex, which reported sales of €33 billion and net profit of €4 billion last year, has a number of successful brands including Massimo Dutti, Pull & Bear, Bershka and Stradivarius. However, Zara is the behemoth, accounting for 73% of the revenue.

Although he is active, he is in more than 90 countries, Spain remains its largest market, with more than 1,200 Inditex stores and 14% of sales last year.

A big shock was the disappearance of its second largest market, Russia, as Inditex froze operations and eventually sold 500 stores after the country invaded Ukraine. That no greater damage was done, however, was evidence of its strength elsewhere.

The new No. 2 market is the USA, which, according to Cifuentes estimates, accounts for 9% of sales. Although Inditex does not like to expand by leaps and bounds, García Maceiras said that it is benefiting from an unexpected result of Covid-19.

“The appetite for fashion in the US has spread more across the country as people due to the pandemic have moved away from New York and California. This is one of the reasons we opened stores in places like Nashville, Salt Lake City, Denver or San Antonio.

With information from the Financial Times