Despite increasing competition from global rivals, Spanish fashion retailer Zara, owned by Inditex, has reported a massive surge in net profit in fiscal 2017-18.
The apparel brand which has been operating in India since 2010 through joint venture with Trent, the Tata Group’s retail arm, reported 73 per cent increase in net profit to Rs. 82.59 crore as compared to Rs. 47.6 crore a year ago.
The apparel retailer has two JVs with Trent, one for Zara and another for Massimo Dutti. Zara and Massimo Dutti jointly reported 20 per cent increase in revenue during the reporting period. Overall, profit for Inditex in India was hit due to net loss of Rs. 2.73 crore for Massimo Dutti in the reporting period.
A total of 20 Zara stores being operated by Inditex Trent reported an increase of 19 per cent in its revenue from Rs. 1,023 crore in 2016-17 to Rs. 1,221.67 crore in 2017-18. While three Massimo Dutti stores under Inditex-Trent JV saw revenue of Rs. 45.75 crore for 2017-18, up from Rs. 30 crore a year ago.
In another development, Tata Group has described Inditex-Trent association which is a 51:49 per cent joint venture as just a financial investment not a ‘long term strategic investment’. Zara’s arrival in India was termed as a new milestone in the Inditex Group’s expansion in Asia.
On the other hand, Zara’s Swedish rival H&M which made its India entry in 2015 reported 19 per cent growth in sales to Rs. 535 crore in the first six-months (December-May) this year. Despite being a late entrant as compared to Zara, H&M has increased its store count to 32 as of May this year.
