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Zara’s local profit up 35 per cent after online launch

Inditex Group’s Australian business, Group Zara Australia, posted a 35 per cent increase in net profit for the year ending January 31, 2019, lifting the figure from $8.9 million to $12 million, according to documents lodged with the Australian Securities & Investments Commission.

This came off the back of strong sales growth, with Zara’s full-year revenue in Australia grew 10.5 per cent to $311.7 million, up from $282 million in the previous corresponding period.

This is due in part to the launch of Zara’s local e-commerce site in Australia and New Zealand in 2018, which opened up a new sales channel for the business and gave more customers the ability to shop with the fashion brand.

Zara’s parent company Inditex launched online stores in a further 106 markets in November last year, which led to a group-wide online sales increase of 27 per cent to $5.19 billion (€3.2 billion) – contributing 12 per cent of group net sales for the year.

Zara had 21 stores in Australia at January 31, 2019, including 19 Zara and two Zara Home stores.

Growing risks

In a statement about its full-year earnings, Inditex highlighted the growing risk fast fashion brands face of being perceived by stakeholders, including customers, employees, shareholders, suppliers and society in general, as unsustainable.

The retail giant noted that it was ranked as the ‘most sustainable company in the global retailing industry’ by the Dow Jones Sustainability Index for the third straight year based on the progress it has made in its environmental strategic plan, and laid out various initiatives it is undertaking to lessen its impact on the planet.

These include gaining greater control over the materials used in the creation of its products, reducing the amount of water used in its supply chain and using energy efficiently.

Additionally, in September of last year, Inditex piloted an at-home pick up service for recycled garments in China, an initiative that is already operating in Spain, though has yet to make it to Australian shores.

Inditex is far from the only fashion retailer tackling the issue of sustainability. The Iconic recently launching Considered, an initiative that allows customers to more easily filter products based on their own personal values, such as sustainable materials, eco-production, fair production, animal-friendly, and community engagement.

Swedish fashion retailer H&M has also committed to add more information to its website to allow customers to understand where its products come from – a move to create greater product transparency.

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