Inditex increases its turnover per store by 45% in four years

The results of Inditex of the first quarter of fiscal year 2024, presented a week ago, showed that the fashion giant is the leader in sales growth among its comparable companies – 7.1% in its first quarter, two points more than sus following competitors (Fast Retaling and Hugo Boss)- and is at the forefront of the sector in terms of profits and margins.

The textile company is gaining share within its sector while increasing its profitability, a qualitative growth that is explained by its ability to operate with low stocks and sell its garments almost without discounts, as well as in its manufacturing and logistics chain. But also in the strong growth that its turnover per store is experiencing.

Inditex closed its last financial year with a turnover of 35,947 million euros, 10.4% more. If online sales are discounted, which skyrocketed by 16% and exceeded 9,000 million, its in-store income was 26,883 million, 8.5% more.

The growth occurred despite the fact that the textile group closed the year with 5,692 stores, that is, 123 fewer establishments than a year before. Therefore, it is not only that Inditex has more sales in its stores, but that each store also has a higher turnover. In large part, but not only, it is because their stores are getting bigger.

The average sales in 2023 was 4.72 million sales per establishment, half a million more than a year before (4.26 million). And the difference is greater if the focus is expanded.

Inditex had an average turnover of 3.26 million per store in 2019, before the pandemic, so in four years its income per store has skyrocketed by 45%. In euros, each store has an average turnover of 1.5 million more.

The figures take into account the income once the digital business is discounted – although both channels increasingly have more blurred borders and sometimes they do not exist.

The company’s virtuous circle is that while it has multiplied its online sales (see page 4), it has simultaneously managed to invoice 2,500 million more in its stores (26,883 million in 2023 compared to 24,386 million in 2019) despite counting in this period with almost 2,000 fewer establishments (5,692 compared to 7,469).

There are two external factors that add more merit to this evolution. In these four years, the sector has faced the pandemic, which affected sales in establishments much more – many months were zero – than the online business – it was boosted by Covid-. In addition, large multinationals have had to deal with the closure of their stores and, in most cases subsequent departure, from Russia due to the war with Ukraine. In the case of Inditex, it was its second market by stores for the textile group after Spain.

The analysis of the evolution of sales per store of the Spanish company’s main competitors shows that the increase in turnover of its stores has not been, by any means, a trend within the sector.

H&M and Gap fall

H&M had a turnover of 20,928 million last year, 5.6% more or an additional 1,000 million in revenue, of which 300 million were contributed by the digital business. Its stores went from sales of 13,875 million to 14,650 million euros, despite the fact that their number fell from 4,465 to 4,369 stores.

Its 3.35 million average turnover per point of sale was 240,000 euros more than a year before, but, unlike what happens with Inditex, H&M’s comparison is negative when the focus is broadened.

The Swedish group had a turnover of 3.40 million per store in 2019, that is, 50,000 euros more than now. Its income per location has fallen 1.5% in this period.

Gap’s decline is higher. Its sales were 13,835 million last year, around 700 million less than in 2022. Its stores, discounting the online business, reached sales of 8,684 million, practically 300 million less than a year before (8,968 million), despite have 200 more stores -3,560 stores compared to 3,352-

Gap had average revenue per establishment of 2.44 million in 2023, practically half that of Inditex and 16.3% less than the figure presented by the American group in 2019, when its turnover per establishment was 2.92 million.

Uniqlo grows, but less

Fast Retailing, Uniqlo’s parent company, has improved its figures, as has happened with the Spanish company, although to a lesser extent. Last year, the Japanese group achieved 3.89 million euros in average income in each of its 3,578 stores around the world, which is almost 600,000 euros more than a year before. This is a greater increase than that of Inditex (500,000 euros), but because its evolution was negative in previous years.

If 2019 is taken as a reference, before the pandemic hit sales in stores, the owner of Uniqlo has gone from billing 3.36 million on average per store to having income of 3.89 million, which represents 15 .7% more or 530,000 extra euros per location. This is a third of what the owner of Zara has grown in this period (45% and 1.5 million in sales per establishment).

In their case, the increase has occurred with a similar number of stores in these four years -3,578 compared to 3,589- and with growth and levels of online sales much lower than those of the company based in Arteixo.

The ‘Primark case’

The low-cost brand has a turnover per store of 24.67 million euros, a huge figure compared to its rivals, although the difference has several explanations. The first is that it does not have online sales, so the customer who wants its clothes can only purchase them in its stores. Another is that it only has 432 stores in the world, but its stores are very large.

In addition, it does not have sub-brands – the average turnover of a Zara store is higher than that of other Inditex brands – and Primark’s low prices generate a lot of sales, even if it is with a lower margin. However, each Primark store has the same turnover now as before the outbreak of the pandemic.

Leader in billing and online growth

The owner of Zara has exploded its digital business in recent years. The first time he gave this information was in 2017, when he reported online sales of 2,533 million. A year later they rose to 3,200 and in 2019 they rose to 3.9 billion.

The boom arrived in 2020, caused by the pandemic and the closure of stores, which led customers to digital platforms and allowed Inditex to achieve online sales of 6,612 million.

However, they have not stopped growing since then: 7,500 million in 2021, 7,806 million in 2022 and 9,064 million last year.

The figure represents an increase of 132% compared to before the pandemic (2019) and places Inditex as the leading group for online billing among its peers, but also as the one that has grown the most in this period.

Its rivals have also increased their digital business, although to a lesser extent. H&M had online sales of 6,278 million euros in its last financial year, 330 million more than a year before and almost 3,000 million more than in 2019, 87% more.

In this same period, the online business of Fast Retailing (Uniqlo) has grown by 65%, from 1,490 to 2,455 million, which represents an increase of almost 1,000 million.

Gap has grown more in absolute terms, going from 3,800 million online sales in 2019 to 5,151 million in 2023, although the increase remains at 35% relatively. Four years ago Inditex had a turnover of only 100 million more than Gap through its digital platforms. Now, the difference is almost 4,000 million.