Executive Briefings

How Zara Is Defying a Broad Retail Slump

Madrid - what retail crisis? Amid a major retrenchment by American companies such as Gap Inc., J. Crew Group Inc. and Nordstrom Inc., one player continues to defy gravity: Zara. And the rapid-fire design-and-production system that has allowed the Spanish giant to outpace rivals is now giving it a powerful platform to succeed online, an outlet that has confounded its lumbering rivals.

How Zara Is Defying a Broad Retail Slump

Last week, Inditex SA, Zara's parent company, reported €654m (about $733.3m) in net profit for the first quarter, an 18-percent jump over the same period last year. Total sales at the world's largest fashion retailer by sales climbed 14 percent to €5.57bn ($6.22bn).

The results are in contrast to the deep pain afflicting many of Zara’s rivals amid sea changes in the way consumers shop. Fewer shoppers visiting malls and online retailers squeezing the profits of traditional bricks-and-mortar outlets are upending the sector’s longstanding business model.

Chains such as J.C. Penney Co. and Sears Holdings Corp. are closing hundreds of outlets to stanch their losses. Just last week, J. Crew reported its 11th consecutive quarter of same-store sales declines, days after its longtime chief Mickey Drexler announced he will step aside.

By contrast, Zara’s pace-setting fast-fashion model is powering ahead.

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Last week, Inditex SA, Zara's parent company, reported €654m (about $733.3m) in net profit for the first quarter, an 18-percent jump over the same period last year. Total sales at the world's largest fashion retailer by sales climbed 14 percent to €5.57bn ($6.22bn).

The results are in contrast to the deep pain afflicting many of Zara’s rivals amid sea changes in the way consumers shop. Fewer shoppers visiting malls and online retailers squeezing the profits of traditional bricks-and-mortar outlets are upending the sector’s longstanding business model.

Chains such as J.C. Penney Co. and Sears Holdings Corp. are closing hundreds of outlets to stanch their losses. Just last week, J. Crew reported its 11th consecutive quarter of same-store sales declines, days after its longtime chief Mickey Drexler announced he will step aside.

By contrast, Zara’s pace-setting fast-fashion model is powering ahead.

Read Full Article

How Zara Is Defying a Broad Retail Slump