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A Grey Report Card Fast Fashion Brand ZARA Net Profit Increased By Only 1%

2014/3/31 9:50:00 54

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Fast Fashion Brands ZARA Clothing H&M UNIQLO

< > many a > "fast turnover" and "take away the bill" > fast fashion brand < /a > has occupied the wardrobe of young people. ZARA is one of the rapid rise. In the central business circle of the first tier cities in China, it has spent a lot of money to decorate their huge windows. A long queue outside the fitting room seems to be announcing its earning power. However, in 2013, the fast fashion brand praised by the industry turned up an embarrassing report card. 
 recently, fashion brands < a > ZARA < /a > parent company and the world's largest retailer InditexSA (ITX.MC) released 2013 earnings, and annual net profit growth was less than 1%. In the past three years, Inditex has maintained double-digit net profit growth. The fast growing trend of fast fashion is difficult to sustain? 
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 the ZARA parent company, which has always been praised by the industry as a learning benchmark, has handed out a report card that surprised the industry. 
 according to Inditex's performance, the net profit for the year ended January 31, 2014 is only less than 1% to 2 billion 380 million euros in the 2012 fiscal year, which is the lowest growth rate for ZARA's parent company in five years. 
 public display, Inditex group was founded in Spain in 1975, is currently one of the four largest fashion chains in the world (the other three are the American leisure fashion giant GAP, the Swedish fashion giant a > H&M < /a >, Germany's parity clothing chain giant C&A). With its many clothing brands, ZARA is the most successful, and its revenue is more than 60% of the parent company. It is considered one of the most valuable brands in Europe. 
 "if the annual growth is less than 1%, it seems to be standing in step, but compared with the annual growth of CPI, the whole enterprise is going backward." Chen Yi, a senior retail management expert, told reporters directly. 
 March 27th, for the reasons for the slowdown in performance growth, ZARA responsible person told our reporter that the main reason is the impact of exchange rate. Meanwhile, in 2013, Inditex group increased its investment to refurbish stores, and this shop refurbishment plan is very necessary for the long-term development of Inditex. 
 financial results show that 440-480 stores were originally planned, but the reason why the shop speed was not up to standard was that it changed the strategy to close the smaller stores in the middle term, set up large new stores, and renovate some 100 important flagship stores. 
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 ZARA < < a href= > http://sjfzxm.com/news/index_s.asp > > fast fashion > /a > is one of the most successful marketing modes in recent years. 
 Senior retail expert, Ding Haozhou, President of China business management group, told our reporter that the reason for ZARA's performance is mainly due to the rapid expansion and price increase of ZARA in the past two years, resulting in an increase in inventory and a decline in gross margin. 
 earnings report shows that as of January 31, 2014, all InditexSA a ITX.MC http://sjfzxm.com/news/index_s.asp brands > /a > had 6340 stores in 87 markets worldwide. In the 2013 fiscal year alone, the group added 331 new stores, with an increase of 9% in retail space. 
 at the same time of large scale shops, product price increase also let consumers slowly away from ZARA. 
P, a senior industry veteran who declined to be named, told reporters that the price of ZARA was basically the same as that of its old rival H&M, but in the past two years, the price of ZARA clothes was significantly higher than that of H&M. 
 in the process of rapid expansion and price increase, the increase in stock and the decline in gross profit rate become an indisputable fact. According to the financial report, in 2013, the gross profit margin of Inditex group dropped by 50 basis points to 59.3%. 
 "fast fashion brands believe in the rule of" fast and unbroken "business rule, although creating the myth of supply chain with" 15 days and one cycle ", but from the index of gross profit margin decline, it is likely that the company is discounting the stock. Ding Haozhou told reporters frankly that because of the rapid opening of ZARA, the consumption discrepancy among different regions, coupled with the rapid subsidence and rapid price increase, eventually led to an increase in the backlog of goods. 
 according to the previous performance report of Inditex group, its 2013 year growth was weak, and even in June last year, there was a rare large-scale inventory clearing action. 
 another industry insider who asked not to be named told reporters that although ZARA had opened many stores in the two or three line cities, the shops with good real performance were basically in the first tier cities, while the two or three line city stores were basically on the margins of losses, basically relying on subsidies from the first tier cities, which eventually led to a vicious circle of marketing mode. 
 "the decline of ZARA performance is very much related to the very easy replication of ZARA mode." Zhang Qing, founder of Beijing's key road sports consulting, told reporters that ZARA has entered China for many years. Although it has great advantages in operation and mode, with the rapid development of China in recent years, domestic enterprises already have the ability to copy ZARA mode. "Under such circumstances, the ZARA's mode advantage is being diluted without innovation." 
 the status of a brother is threatened. 
 "from the present point of view, ZARA is still the first big tycoon of" fast fashion ". If there is no merger and acquisition, the position of its leading industry can hardly be surpassed in two or three years. If ZARA mode is not ploughed on the original basis, the possibility of being replaced in the future will be great. Ding Haozhou told reporters. 
 in market competition, < a > UNIQLO /a > is undoubtedly the biggest enemy of ZARA. UNIQLO has been expanding rapidly in the past two years. In order to lay the Chinese market, UNIQLO parent company sells fast to sell roundabout tactics, issuing HDR to help the Greater China and Southeast Asia, and improving the popularity of fast selling group, UNIQLO and its brands. 
 in addition to the market level, it also faces the competitive pressure of rival H&M in design. 
 Chen Yi told reporters that ZARA is still following the pattern of micro innovation in design, and H&M basically cooperated with some big brands in the past two years. Its products are emerging with multiple innovative elements, that is, the transformation is being made to the customized direction. Therefore, technological innovation and star effect marketing are the main reasons for H&M to surpass ZARA in terms of sales volume. 
 it is worth mentioning that H&M's performance has maintained double-digit growth. Statistics show that in the first quarter of 2014 fiscal year December 1, 2013 to February 28, 2014, the group achieved a total sales value of 37 billion 524 million kronor (about 5 billion 760 million US dollars), representing an increase of 13% over the same period last year. 
 for the development of 2014, the relevant person in charge of ZARA told reporters that the performance has been good since the 2014 fiscal year. In the six weeks from February 1st to March 15th, the group's total sales increased by 12%. China is a market that Inditex group attaches great importance to. It is expected that by the end of 2014, the number of stores will reach 500. 
 can struggling ZARA achieve its peak performance in 2014?