Following today’s release of Inditex’s figures for FY2022/23 ending 31 January 2023; Pippa Stephens, apparel analyst at GlobalData, a leading data and analytics company, offers her view: “Inditex continues to defy the struggles being experienced by the wider apparel market, with group revenue rising by an impressive 17.5% to €32.6bn (15.1% above FY2019/20) and operating EBIT growing by 28.9% to €5.5bn in FY2022/23, as its compelling ranges and fast reaction to trends helped it remain in favour whilst consumers grappled with inflationary pressures. This is only a minor slowdown from the 19.3% growth reported for the first three quarters of the year, so the group remained highly resilient throughout Q4, with its vast offer of partywear supporting it during the festive period. The Americas region outperformed, with its share of total sales rising by 2.5ppts throughout the year to 20.0%, and it plans to grow this market further through store openings, relocations and enlargements. In contrast, Spain’s sales mix remained flat, while Europe excluding Spain and Asia and the rest of the world saw their mixes decline. The group’s strength has persisted into FY2023/24, with constant currency sales rising by 13.5% year-on-year between 1 February and 13 March 2023 (17.5% excluding Russia and Ukraine), and the group expects to experience ongoing growth throughout the rest of the financial year.
“Zara was the group’s star performer once again, with revenue rising by 21.3% to €23.8bn, driven by its inspiring product ranges and wide appeal among the ages. Contrastingly, Massimo Dutti and Oysho floundered the most, both growing by just 4%. The former’s specialism in formalwear has made it less favourable now that hybrid working has become the norm, with FY2022/23 sales still 16.2% behind FY2019/20 levels. Though Oysho’s sales beat pre-pandemic levels by 3.1%, this is disappointing when compared to the group’s overall performance, especially considering its focus on activewear and underwear, which have been standout categories within the apparel market in the last few years. It has just entered the UK market with its first store opening in London in March 2023, likely to take advantage of strong demand for athleisure within the country, however it may struggle to have a significant impact on consumers as it faces tough competition from a wide range of available sportswear brands, including Lululemon and Sweaty Betty.
“Inditex’s online performance slowed as spend shifted back to stores, but the channel still experienced growth of 4% in FY2022/23, owing to the considerable investments it has made. The introduction of postal returns fees for Zara in the UK in May 2022 clearly had minimal impact, encouraging it to follow suit in its home market of Spain in February 2023. It plans to make further improvements to its platform over the coming year, including size recommendations and personalisation tools, to support its goal of online accounting for 30% of total sales by 2024. As well as these digital enhancements, it is still developing its physical proposition too, as while its selling area remained relatively flat in FY2022/23 excluding its closures in Russia, it has continued to close underperforming stores, open in new locations and carry out refurbishments. This will allow it to capitalise on the ongoing appetite for in-person shopping, with shoppers now having greater appreciation for the leisure and social aspects of shopping instore following the pandemic.”
