MADRID: Zara owner Inditex reported a record net profit in the first half of 2023 on Wednesday due to strong sales as the world’s biggest fashion retailer raised prices.
The Spanish group posted a net profit of €2.51 billion (US$2.7 billion) in the first six months to July 31, beating its previous record of €1.79 billion in the same period a year earlier.
This result was higher than the €2.42 billion predicted by analysts from financial analysts at FactSet.
Inditex attributed this momentum to the strong growth in sales, which reached €16.85 billion, 13.5% higher than in the same period a year earlier, demonstrating “very satisfactory development both in stores and online”.
Its pre-tax earnings (EBITDA) rose by 15.7% to €4.66 billion, the company said.
In a complicated global context, the record first-half figures reflected the “determined progress” made by the retailer, Inditex chief executive Oscar Garcia Maceiras said in the statement.
Inditex, which owns seven brands including upmarket Massimo Dutti and teen label Stradivarius, has been hit by the war in Ukraine that forced it to close its 514 shops in Russia, at the time its second-biggest market after Spain.
The group has also seen its production costs rise due to global increase in transport and energy costs, which it decided to offset with price hikes, setting itself apart from rivals like H&M.
Rising inflation had sparked an unprecedented strike at the retailer late last year, prompting the fashion giant in February to agree a 20% wage hike for staff in several countries to compensate for soaring costs.
Based in Spain’s northwestern Galicia region, Inditex has 165,000 employees, the vast majority of whom work on the shop floor. Most are women.
The Spanish group underwent a leadership shake-up last year, with Marta Ortega, daughter of multi-billionaire founder Amancio Ortega, taking over as chairwoman.
Given the strong results, the group reaffirmed its objectives for 2023, saying it saw “great growth potential going forward”.