Inditex is Spain’s most valuable company ever
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Inditex is Spain’s most valuable company ever

Spanish fast-fashion giant Inditex, the owner of brands like Zara and Pull & Bear, has finally become the country’s most valuable company ever. After a three-month surge that has seen its share price appreciate by almost 19%, Inditex has eclipsed the ten-year old high point set by Telefonica SA. This surge is the result of a very strong earnings report posted in March, and positive sentiment over the company’s forward-looking internet strategy.

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In March, the company posted like-for-like sales for the year ending January 2017 that rose by 10% against the previous year. This was better than had been expected, and it blew rival fast-fashion company H&M out of the water. And while the company’s gross profit margin failed to live up to analysts’ expectations, this was clearly due to negative currency effects that are expected to reverse over the coming year. After adding stores in 56 countries, Inditex is more global than its competitors, and hence less reliant on any single market. It’s also huge: the company now has over 7,200 stores worldwide.

Inditex is up almost 19% over the past three months

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SOURCE: Yahoo Finance

Inditex is also expanding fast into the online world. But unlike many latter-day converts to Ecommerce, Inditex fits its online and offline operations together seamlessly to create a powerful omnichannel platform. Speaking to Internet Retailing in September last year, Rupal Karia, managing director of retail and hospitality, UK and Ireland, at Fujitsu, said:

“Rather than focusing on one channel, Inditex has made sure to cater to the differing needs of its varied customer base. It has ensured that it provides mobile payments and other platforms that customers have now come to expect, which has benefited Inditex massively. Customers don’t want just online or high-street now, but require a blend of digital and face-to-face services for the greatest convenience and experience. I personally experienced a Zara store when an item was out of stock, and an assistant within minutes had shown me it on the web site which enabled me to make an order!”

Disclosure

Dominion holds Inditex in its Global Trends Luxury Fund.


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The views expressed in this article are those of the author at the date of publication and not necessarily those of Dominion Fund Management Limited. The content of this article is not intended as investment advice and will not be updated after publication. Images, video, quotations from literature and any such material which may be subject to copyright is reproduced in whole or in part in this article on the basis of Fair use as applied to news reporting and journalistic comment on events.