Zara owner’s profits jump despite Russia closures
Zara owner Inditex reported Wednesday a surge in profits for the first half of the year despite rising costs due to soaring inflation and the Spanish fashion giant’s closure of shops in Russia.
ara owner Inditex reported Wednesday a surge in profits for the first half of the year despite rising costs due to soaring inflation and the Spanish fashion giant’s closure of shops in Russia.
The company, which also owns Massimo Dutti, said it pulled in a net profit of 1.8 billion euros ($1.8 billion) in the first six months of 2022, a 41-percent increase from the same period last year and a “historic” high.
“Our business model is progressing at full pace and has great growth potential going forward,” said Inditex chief executive Oscar Garcia Maceiras, who replaced longtime CEO Pablo Isla earlier this year.
Inditex results overcame higher manufacturing and transport costs that have been driven up by supply chain bottlenecks following the end of Covid lockdowns and Russia’s invasion of Ukraine.
The fashion group decided in March to shut its 502 stores in Russia, one of its biggest market after Spain with 10 percent of company sales.
Inditex set aside 216 million euros in provisions in the first quarter to cope with the closures.
The company said the opening of new stores and rising online sales helped offset the closures in Russia.
The fashion retailer expects internet sales to account for 30 percent of total sales by 2024.