Inditex, owner of fast fashion brand Zara, raked in a 24 percent increase in net profit for the first nine months of the fiscal year. The retailer accomplished this feat despite softening global demand for clothing and elevated supply chain costs.
“In the current challenging context, these results clearly reflect the strength of our unique business model: fashionable collections, an appealing shopping experience and a team highly committed to achieving profitable and more sustainable growth," Inditex CEO Óscar García Maceiras said in a statement.
The windfall didn't come out of nowhere. The multinational clothing company reported an 80 percent quarterly jump in profits back in June, as well as rising sales.
More sales doesn't necessarily translate into profits — especially when costs are also rising — but Zara has managed to pass those costs onto consumers with price increases around 5 percent for some products, according to analysts.
The company has been able to limit increases in operating expenses to 17 percent, which is below the 19 percent jump for in-store and online sales from a year ago.
Yet keeping down costs has come with its own backlash. On November 24, Zara employees in Madrid staged a protest outside the chain's biggest store to demand bigger higher wages. The company had offered a one-time bonus and promised to raise wages gradually through 2024, but workers weren't satisfied.
"Inditex is increasing its prices and improving its profits, while employees' wages are lagging behind," Anibal Maestro, the head of the union that organized the rally, told Reuters.