Zara’s owner, Inditex, makes a lot more money after a pandemic because people spend a lot.
In the three months leading up to April, the biggest fast fashion company in the world had its best quarter in a decade. This was because the end of pandemic restrictions in major markets led to a spending spree on new clothes.
Inditex (BME: ITX), which owns Zara and Massimo Dutti, increased its net profit for the three months ending in April to €760 million ($812 million).This was in line with predictions and well above the €734 million it made in the same quarter last year, before COVID-19 hit the world.
Sales went up by 36% to €6.7 billion because the company was able to pass on higher costs of production to customers. Operating costs went up by 24%, which was much more than sales growth.
At the start of the day in Madrid, Inditex stock went up 3.3%, reaching its highest point in three months.
Even though the results included a €216 million charge for closing stores in Russia after the Kremlin invaded Ukraine in February, Inditex’s real performance was even better. In February, Russia was Inditex’s second-largest market in terms of shops, and between February and the middle of March, it was responsible for 5% of its sales growth.
“The performance has been very strong across all geographies, with the exception of those markets subject to restrictions,” the company said, referring to China, where lockdowns in Shanghai and other places hurt sales in April. About 90% of its stores around the world are open right now.
On the other hand, it said that the U.S. continued to grow strongly, even though many U.S. clothing retailers have warned about their profits and lowered their sales expectations because of rising inflation.
Since the end of the reporting period, business has stayed strong. The company said that its spring and summer collections were well received. Between May 1 and June 5, store and online sales were up 17% from the same time last year.
