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Inditex to accelerate its digital and sustainable transformation

Inditex

Inditex, owner of Zara, reported its performance in 2019. Pablo Isla, the group’s Executive Chairman, highlighted how Inditex is set to continue into the future with its “flexible, integrated and sustainable manner”. He also underlined the “extraordinary commitment of all of the people who are part of Inditex”, coupled with a strong and flexible business model.

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Pablo Isla reviewed Inditex’s performance in 2019 and highlighted that Inditex will invest €2.7 billion to accelerate its digital and sustainable transformation during the next three years, having already invested over €10 billion in these strategically important areas in the last seven years

The company’s shareholders approved the Board’s motion to pay an ordinary dividend of €0.35 per share, due for payment on 2nd November 2020

At the meeting held at its headquarters in Arteixo, Inditex’s shareholders approved the group’s performance in 2019, a year in which revenue grew 8% to €28.29 billion, underpinned by growth in all brands and regions and both in store and online. Inditex reported growth in sales from its online platform of 23% to €3.9 billion, which is 14% of the total sales.

EBIT, at €4.77 billion registered year-on-year growth of 10%, while net profit climbed 6% to €3.64 billion. During his presentation to Inditex’s shareholders, Pablo Isla highlighted how the group is ready to tackle the future “in a flexible, integrated and sustainable manner based on the strong and flexible integrated stores/online business model, the company’s strong performance, the €10 billion investment primarily in technology over recent years and the extraordinary commitment of all the people who make up Inditex”.

That solid earnings performance translated into strong cash generation in 2019, such that net cash hit a new record of €8.06 billion, up 20% from year-end 2018.

Thanks to the major investments made in recent years, the group boasts an integrated store and online sales platform and a centralised and flexible distribution base capable of delivering its fashion offering in more than 200 different markets. The group’s spacious, refurbished and eco-efficient flagship stores in the finest shopping locations in 96 countries are complemented by its websites, which receive over 4 billion visits a year, while the eight brands’ social media handles have garnered over 188 million followers.

During his speech, Pablo Isla also reminded the company’s shareholders of the group’s plans to invest a further €2.7 billion in the next three years to further accelerate the digital and sustainable transformation strategy initiated in 2012. As a result, online sales are expected to account for over one-quarter of the total by 2022.

“And we will do all of this in a sustainable and responsible manner, true to our essence, which is to offer the best experience and best fashion to our customers, listening to them at every step of their journey with us”, he said.

Thanks to the full deployment of RFID technology across all the brands and of the integrated stock management system across the store platform, Inditex’s executive chairman stressed that these investments will enable the full development of a proprietary technology platform called the Inditex Open Platform (IOP). This will enable a tailored yet seamless customer service experience across all customer interfaces,

“That technology architecture, which will be fully tailored for the need to keep our business model flexible, will allow us to offer seamlessly integrated shopping services and experiences, anywhere, anytime,” said Isla, adding that the “Store Mode” will mean customers can navigate the group’s stores from their mobile handsets in accordance with their preferences.

Isla also outlined the company’s ambitious targets regarding sustainability. The first goal is to reinforce the responsible management of in-store energy used consumption thanks to the centralised management platform known as Inergy, to which 3,587 stores are already connected up. Other targets include lifting the percentage of renewable energy and handling all materials used in the group’s stores, logistics platforms and head offices, in accordance with the Zero Waste programme.

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In parallel, the company plans to continue to make progress on the elimination of plastic, a strategy articulated around two milestones: in 2020 it will eliminate all plastic bags from its stores and online orders; by 2023 it plans to eliminate all single-use plastics from customer interfaces. The significance of the Join Life collections is set to continue to increase in tandem, representing 25% of the total in 2020, putting the company on track for delivery of its goal of using 100%-sustainable fibres by 2025.

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