Fast Fashion Zara No Longer Fashionable? Serious Cost Increases

The fast fashion brand Zara is no longer fashionable? The cost is rising and the popularity of foreign countries is losing. Europe's largest clothing retailer, Inditex SA, reported that the first half of the year's report showed that profits in the first half of the fiscal year fell by 2.4%, 928 million euros, or about 1 billion 270 million dollars. Over the same period, the share price of Inditex SA rose 6 percentage points to 8 billion 90 million euros, or about 11 billion 70 million dollars. The adverse currency turmoil has reduced the recorded revenue by 4 percentage points. Year on the basis of sales performance is still up 4.5%.

In the first half of this year, Inditex added new stores in 40 regions, until its earnings announcement, and operated 6460 branches in 88 countries and regions.

The company's store sales and online sales increased by 10% between August 1st and September 12th.

Inditex's brand Mexico online mall has opened on the 3 of this month, and South Korean regional sales will also be launched on the 24 th of this month. It will visit Tmall, China's largest online shopping mall in October.

Australians' enthusiasm for the fast fashion brand Zara seems to be on the decline. The latest financial report of the retail giant shows that its sales growth has slowed down and its cost has increased.

When Zara opened its first branch in Australia 3 years ago, it triggered a huge response from customers, and there was a long queue outside Melbourne and Sydney branches. In fact, Zara's first branch in Sydney was believed to have sold 80% of its stock on the day of its opening, worth 1 million 200 thousand Australian dollars. Zara 20% of the Australian branch is owned by the family of billionaire Solomon Lu.

Although Zara's aura in Australia has been lost, it is still a magnet attracting some customers. In the year ending January 31st, Australia The sales revenue of the branch jumped by 32.1% to 141 million 160 thousand Australian dollars. New branches in Canberra and Vitoria have made outstanding contributions to strong revenue growth. At present, Zara has reached 9 stores in Australia.

2014 revenue Although two digit growth is recorded, it is obviously less than the 56% growth in 2013. Even so, such gains are still envied by many retailers.

　　 Zara The data submitted to the Australian Securities and Investment Commission (ASIC) also showed that the average sales of each branch continued to decline since 2011, from 42 million 800 thousand Australian dollars in 2012 to 25 million 800 thousand Australian dollars in 2013, and then to 18 million 200 thousand Australian dollars in 2014. 2014's annual profit dropped by 8.5% to 16 million 460 thousand Australian dollars.

Profits are decreasing while costs continue to be broken, but this is not surprising when considering the company's launch of a new store opening plan. At present, the sales cost of Zara has increased by 37.5%, and the cost of management has soared by 146.7%. The total cost of goods increased by 44.7%, exceeding the increase in sales, resulting in a reduction in gross margin from 66.7% to 63.6%.

However, Macquarie Bank has pointed out that the overall financial situation of Zara is still strong and should continue to grab market share from rival stores such as Myer and David Jones (DJs).