Global clothing brands are generally facing the problem of rising raw materials this year, and fast fashion brand Zara’s response is to continue to increase prices.
9month14 day,Zaraparent company Inditex stated at its 2022 first half financial report that it will continue to raise prices this fall to cope with the risk of rising raw material costs. Inditex Group Chief Financial OfficerIgnacio Fernandez said that the average price of the company’s products will continue to rise by a mid-single-digit percentage. .
This is notInditex’s first price adjustment this year. Since the spring and summer of 2022, the company has made many price adjustments. Increase the selling prices of its brands. A UBS research report shows that starting from 2022, the initial price of Zara products will be higher every month. Increases of 10% or more a year ago, and initial price increases of more4 months 18.5% .
Price increases have a significant stimulating effect on performance.The first half of the fiscal year of 2022 (ending20227month31 for six months), InditexNet profit rose 41% to 1.8 euros (approximately RMB 12.5billion yuan). Among them, in the first quarter of 2022, Inditex gross profit margin60.1%, hitting a ten-year high.
InditexNet profit increased41%
Ending2022year7month31In the six months since the date of >14.8EUR (approximately RMB102.8 billion); net profit increased by 41% To1.8 euros (approximately RMB12.5 yuan); profit before interest and tax is2.4 Euros (approximately RMB16.67 billion), higher than what Bloomberg analysts predicted 2.36 billion euros (approximately RMB16.4 billion); gross profit margin reached 57.9% span>, the highest level in 7 years. It is worth mentioning that in the first quarterInditex gross profit margin reached the highest level in ten years, which was 60.1% .
Inditex explained that consumer demand for new clothes remains strong. In the previous 2021 annual financial report, Inditex had stated that it would make necessary adjustments in markets experiencing inflation and currency depreciation. Prices adjust to protect profit margins.
From a specific market perspective, the European market, represented by Spain, where the brand is located, is still the company’s largest revenue market, accounting for 60.5% of its performance, year-on-year. Growth0.3%; market share in the Americas increased from 17.3% to 20.1% . In Asia and other regions, including China, market revenue continued to decline to 19.4%. 2022At the end of 7, Inditex group The three The brand closes its Tmall flagship store, which means it officially withdraws from the Chinese market.
Judging from the performance of brands under Inditex, Bershka, Pull&Bear and Stradivarius have withdrawn from the Chinese market, but their respective revenue growth has reached 15%To20%. The main brands Zara and Zara Home are still the group’s main sources of income, and their revenue increased year-on-year29%, revenue accounted for 74%.
Highest price increase among fast fashion brands
Among the fast fashion brands that have increased their prices, zara is the brand that has increased the most.
A UBS analysis report stated that the average price of Zara clothing products increased year-on-year in July this year. 12.2%, higher than inflation levels in many markets around the world.
For comparison, the price increase of clothing brand H&M was 5.6%. H&M’s 2022 first quarter report stated that the price increase will be smaller than that of other competitors and guarantee basic clothing products. Not affected. Uniqlo has also recently announced price increases due to insufficient raw materials, rising transportation costs and labor costs.
Credit Suisse analysts say Inditex benefits from favorable trends, climate and pricing strategy, but this does not guarantee consumers will not be wary of further price increases Feeling hesitant.
Inditex also stated that future performance growth will be based on investment in store optimization, online channel upgrades and logistics system improvements, and is expected to be completed by 20242019, online shopping will account for more than 30% of total sales.
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