- Meenakshi Kumar |
Zara’s net profit went up more than 70 per cent in India in 2017-18. Spain-based Inditex, the owner of Zara operates in India through two joint ventures with Tata Group’s Trent, one for Zara and another for the bridge-to-luxury label Massimo Dutti. Zara and Massimo Dutti collectively saw 20 per cent revenue growth in India last year. Zara has been a success in India since its arrival in the country in 2010. There are 20 Zara outlets in India.
The other joint venture that operates three Massimo Dutti stores reported revenue of Rs 45.75 crores for 2017-18 up from Rs 30 crores a year ago. Zara's growth is flagging because of heightened competition, which is forcing the company to lower the price of clothes and footwear and to put more apparel on sale. Growth in online sales is also chipping away at profitability, because it is more expensive to ship internet orders.
Inditex’s gross profit margin is expected to bottom out this year as currency headwinds ease. The crucial profitability metric has fallen somewhat in recent years.