Om Zara enhances profits through large stores and high prices

The parent company of clothing chain Zara increased its earnings in the first quarter of its breakout fiscal year. Inditex, which is also behind brands such as Bershka, Massimo Dutti and Stradivarius, has raised the prices of its clothing. But the Spanish fashion group has also cut costs by focusing on fewer but larger stores. As a result, the cost of the garment sold decreased.

At the same time, Inditex faced rising personnel costs. In Spain alone, employees in stores earned an additional five salaries after promotions. But Inditex makes up for this by selling its very expensive clothing outside of Europe. In the United States, Mexico and Saudi Arabia, customers lost almost twice as much money as in the eurozone.

According to Inditex, the spring-summer collections of their chains have been well received. In the months from February to April, the Spanish group sold €7.6 billion worth of clothing and home accessories in more than 5,000 stores of its various chains. That was an increase of 13 percent over the previous year even though Russian stores were sold out last year. Profits more than halved to 1.2 billion euros.