The world’s largest clothing retailer is now selling leftover Zara clothes to compete with fast fashion

The world’s largest clothing retailer is now selling leftover Zara clothes to compete with fast fashion
By Lily Kuo @lilkuo 2 hours ago

The numbers: Inditex, the world’s largest clothing retailer, best known for its Zara chain, reported almost flat net profit for 2013—€2.4 billion, or $3.3 billion—in line with expectations but only 1% higher than the year before.

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The takeaway: Inditex has increased profit every year since it first listed in 2001—but those days may be over soon. Profit growth has shrunk over the last few years, pushing the company to look more to emerging markets for new growth. Inditex plans to open between 450 and 500 new stores this year, as well as online operations to serve shoppers in Mexico and South Korea.
What’s interesting: Inditex’s rivals are starting to beat the company on its own turf, using the fast fashion model that Inditex pioneered—copying high-fashion designs within a matter of weeks of their appearance on a runway—but at cheaper prices. Inditex’s home country, Spain, now accounts for only 19% of its total sales, down from 21% in 2012 and 37% in 2007. Sweden’s H&M and Britain’s Primark, by contrast, have grown in Spain. When Inditex’s sales fell 5.5% in 2012, H&M’srose 5%. To compete, Inditex has now opened its own discount stores in the country, under the name “Lefties”, to sell last season’s leftover Zara clothes.

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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