Zara India reported 72% increase in its profit to Rs 82.59 crore in FY18, driven by strong sales and lower price points that helped the company acquire new customers.
Zara brand-owner Inditex and the Tata Group’s retail arm Trent, which runs Zara stores in India, reported 19.4% increase in net sales to Rs 1,221.67 crore, according to Trent’s annual report released on Friday.
The Company has two separate joint ventures with the Inditex group of Spain with a shareholding of 51% (Inditex) and 49% (Trent) — one for Zara and the other for Massimo Dutti stores in India. The joint venture for Zara operates 20 stores in Delhi, Mumbai, Bengaluru, Pune, Surat, Jaipur, Chandigarh, Chennai, Mohali, Hyderabad and Gurgaon.
Plans are to steadily expand the presence of Zara stores in India over the next three to four years in the major cities . The primary challenge to faster expansion is the availability of high quality retail spaces which can be expected to generate reasonable sales turnover, the company said in the report.
Including in the context of brand ownership and the arrangements for merchandise supply with the majority partner entirely controlling the core customer proposition with respect to the fashion, the company views its commitment to this joint venture primarily as a financial investment and consequently, it may be appropriate not to consider this as a long-term strategic investment integral to other retail operations. The joint venture for Massimo Dutti operates three stores in Mumbai and Delhi, and this joint venture entity Massimo Dutti recorded total revenues of Rs 45.75 crore.
Zara opened its first store in India in 2010 and set the benchmark as the fastest growing and the biggest international apparel brand in the country.
Rival fashion retailer Hennes & Mauritz’s (H&M) yearly India sales nearly doubled in 2017.
H&M, which follows a December-November financial year, entered India in October 2015. For the year to end November 2017, sales were up 94.6% to Rs 954 crore. H&M’s sales in India during the six months ended May jumped 19% to Rs 535 crore helped by new store additions and lower priced merchandise than most rivals. H&M, the world’s second-largest clothing giant, had said it will open 50 stores in India with an investment of Rs 700 crore by 2020. It has opened, on average, a store every month, taking the tally to 32 until May.