Inflation impacts all business segments, from food and beverages to electronics, around the world, prices have risen due to difficult macroeconomic conditions.
The way out of the pandemic, where governments had to resort to cash aid, and the war between Russia and Ukraine, with the increase in raw materials, They formed a problematic and especially inflationary scenario.
Clothing prices have also been rising along with the increase in production, input and transportation costs.
This phenomenon is making the large clothing chains, for now, achieve very good benefits from the rise in prices. However, the arrival of a recessive period, with a brutal drop in sales, is a risk that is just around the corner.
Zara seeks to overcome the crisis with price increases
The company that owns the Zara brand, the Spanish Inditex, registered a 24 percent increase in its net earnings during the first nine months of its fiscal year.
The key: price rises that helped offset weakening global demand for apparel.
Indeed, as published in its latest financial report, sales in stores and online of Zara, the retailer of fast fashion largest in the world, grew 19 percent over the previous year, somewhat better than analysts expected.
Price increases of 5 percent (or more) on some garments helped boost earnings.
The company, which also has brands such as Massimo Dutti and Bershka under its wing, achieved earnings of just over 3.3 billion dollars, notably above the 2.8 billion dollars in the same period of 2021.
In parallel, and given the news, Inditex shares increased by 2 percent on the Madrid Stock Exchange.
The company now led by Marta Ortega, the founder’s daughter, said in a release that the good performance in the United States helped boost sales, and anticipated very good prospects in China in the medium and long term.
Sales grew 11 percent in the third fiscal quarter, which is a slower pace than in previous months. This reflects a weaker consumer environment.
Inditex’s second quarter sales had grown by 16 percent compared to the same period of the previous year.
H&M, which has struggled to compete with Zara, will report its quarterly results on Thursday, December 15.
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The crisis does not affect Walmart, which bills more due to inflation and higher demand