Inditex Sales Rise as Zara Owner Benefits From Tech Investment

Thomas Mulier and Rodrigo Orihuela, Bloomberg News

Shopper hold bags from Zara clothing retail shops, operated by Inditex SA, and Selfridges & Co. Ltd. department store in London, U.K. on Monday, Nov. 5, 2018. U.K. retail sales growth weakened in October after a summer of strong spending, according to the Confederation of British Industry. , Bloomberg

(Bloomberg) -- Inditex SA reported an acceleration in sales as the Zara owner benefited from its expansion into e-commerce and other technologies that make retail more efficient.

Sales rose 7.5% to 19.8 billion euros ($22 billion) in the nine months through October, meeting analysts’ estimates. The company maintained its forecast for like-for-like sales growth of 4% to 6% this year.

Key Insights

Inditex’s introduction of RFID tracking technology, which makes it easier to manage inventory and frees up employees to spend more time with customers, is boosting sales, Richard Chamberlain, an analyst at RBC Europe, has said.
Operating profit came in a hair ahead of analysts’ estimates. Changes in international accounting standards have lifted operating profit this year, mostly related to how Inditex deals with leases. Analysts have said that makes predictions difficult.
Inditex is adding Anne Lange, a French tech entrepreneur, to its board. She co-founded Mentis, a software startup specialized in the internet of things, making her well-placed to advise on matters such as RFID.

Market Reaction

The stock has gained 28% this year, on track for the first annual increase in three years. The stock quintupled in the eight years after the financial crisis as it withstood a consumer downturn.

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