Zara owner Inditex posts record profit

ARTEIXO, Spain — Zara owner Inditex, the world's biggest fashion retailer, promised shareholders a record dividend on Wednesday after posting its highest-ever profits last year despite a complicated global backdrop.

The fashion giant, which has seen a strong performance on Spain's stock market over the past year, posted net profits of 5.4 billion euros ($5.9 billion), up 30 per cent from 4.1 billion euros in 2022 which was also a record.

The figure, which follows a solid fourth quarter, was in line with the expectations of analysts polled by financial data firm FactSet, who predicted profits of 5.36 billion euros.

Inditex has been able "to take advantage of the opportunities to keep growing profitably", said Oscar Garcia Maceiras, chief executive of the company which is based in the northwestern Galicia region.

The group, which since early 2022 has been headed by Marta Ortega, daughter of multi-billionaire founder Amancio Ortega, pointed to dynamic sales which hit a record 35.9 billion euros in 2023, a 10.4 per cent increase from the previous year.

Inditex, whose eight brands include Pull&Bear and upmarket label Massimo Dutti, notably benefited from consumers' taste for shopping online which rose by 16 per cent to reach 9.1 billion euros.

Given the results, the retail giant said it would pay shareholders a dividend of 1.54 euros, a 28 per cent increase from 2022, and the highest in the group's history.

It also expressed optimism about 2024, given that sales have continued to grow in recent weeks, up 11 per cent year-on-year for the period from February 1 to March 11.

Inditex's results are at odds with the difficulties experienced by many other fast fashion retailers, some of which have been forced to close or lay off staff in recent months, notably in France, like Kookai and Paris fashion brand Naf Naf.

The sector is facing heightened competition from the rise of ultra-low-cost brands like Chinese platform Shein and Ireland's Primark which have unsettled traditional low-cost clothing chains.

It has also been hit by geopolitical tensions, notably in the Red Sea where global shipping has been disrupted by Houthi rebel attacks and by persistently high inflation, which has weighed on purchasing power.

But such pressures seem to have had little impact on Inditex which has posted a string of records and performed well on Madrid's Ibex 35 stock exchange.

The fashion giant — which launched its "Pre-Owned" second-hand clothes platform in around 15 countries in December — has seen its share value grow by more than 40 per cent to reach 40 euros over the past year.

That has raised its market capitalisation to more than 127 billion euros, confirming its position as global leader ahead of Japan's Fast Retailing, owner of Uniqlo and Sweden's H&M, currently in a rocky period after a disappointing 2023.

"The group's domination of the apparel retail market is more visible than ever," Bank of America analysts said late last year, saying retailer had entered "a virtuous cycle fuelling significant market share gain at industry leading margins".