Zara’s fashion revolution

«Marta (Ortega, president of the group leader Inditex, ed.) and I have known each other for years», Stefano Pilati told MFF in Paris during the cocktail party for his very first collaboration with Zara. «For years we said to do something together... and here we are». The event, held during Paris fashion week, was attended by the big names of the global fashion system, with super models like Natalia Vodianova (madame Antoine Arnault, Lvmh, ndr), Irina Shayk, and of course Gisele Bündchen, the star of the campaign for the capsule sold out in a few hours, shot by Steven Meisel.

«We try to act like a small company and not be distracted by big numbers. Commercial success stems, I believe, from the attention to small details by each individual member of the company», said Marta Ortega during one of her very rare interviews. Together with Óscar García Maceiras, Zara’s new ceo, she has been steering the company toward a premium strategy since April 2022. The product has improved slightly but subtly while she has been in charge. Model Kaia Gerber and Charlotte Gainsbourg were among the collaborators. However, there has been a sharp increase in the fashion rate this year.

Not just in terms of collections. Zara has recently started a number of partnerships, including with haircare (Guido Palau) and the home line (Vincent Van Duysene). They are growing in number and speed, as though the co-labs had appropriated the meaning of fast, which was previously limited to the rate at which clothing was produced. Following the Stefano Pilati collection's arrival in stores, the 2025 collections featuring Kate Moss (available starting on November 30) and Samuel Ross were revealed. The 50th anniversary of the foundation is coming up next year, which would have already required significant communication efforts for a conventional ready-to-wear brand (perhaps we will just have to wait...).

In the last full year of the Spanish giant, net sales grew by 10.4%, bringing turnover to 35.9 billion, 26 of which were generated by the flagship brand. At this pace, even considering a slight slowdown in the quarter announced in early September, Zara’s turnover is set to break through the threshold of 30 billion by 2026. For the group, also in the last full year, profits amounted to 5.4 billion (+30.5%). The online channel rose by 16% to 9.1 billion.

In order to focus resources on flagship stores in key locations, management has cut back on the number of small stores, spending 900 million a year in the 2024–2025 biennium. The Lisbon mega hub is more than 5,000 square meters in size, has a cafeteria open with Castro Atelier de Pastéis de Nata, and integrates digital services (from managing returns to booking dressing rooms with the app). Despite producing about 800 million garments annually on average, management wants to decarbonize the business by 2040. The pre-owned project, among other projects, enables consumers to prolong the life cycle of clothing by donating, repairing, or reselling it.

According to most analysts, average prices have not increased despite the rise in brand perception (fake clothing with the Zara logo is easily found in all emerging countries, frequently alongside the most well-known brands, ed.). However, special projects and capsules have higher prices. Although Zara does not communicate much with traditional advertising, the quality of its campaigns and lookbooks is also on the rise. From the shots of Steven Meisel to those of Mario Sorrenti, up to the photos of David Sims, who shot both Kate Moss in a 2022 report with the styling of Emanuelle Alt and her daughter Lila Moss in the denim campaign for the spring-summer season 2024.

Aspirational consumers, the majority of whom have been shut out of luxury after a sharp price increase, appear to be the target of the strategy that can be inferred from the most recent actions of the A Coruña label. (all rights reserved)

Inditex shares have increased by 58% in a single year

In the fast fashion landscape, the market continues to give confidence to the giant Inditex. After a strong performance in the first half of the year, with sales of 18 billion euros (+7.2%) and net profit of 2.8 billion (+10%) and positive prospects for the second half of the year, BofA-Bank of America has restored the coverage of the Galician group led by ceo Óscar García Maceiras with a buy rating and a target price of 61 euros.

«We expect that the business model of Inditex will continue to grow 2-3 times faster than the market», analysts said. «The group’s full-price sell-out share has steadily improved over the past decade, a trend that we expect to continue by offering the group growing gross margins, together with operating leverage supporting the expansion of the ebit margin».

According to experts, the growth potential of the parent companies of Zara, Bershka, Stradivarius, Pull&bear, and Massimo Dutti is supported by investments three times higher than those of competitors in the next 24 months. «Our estimates on the eps are 1-5% higher than consensus. The shares are attractive, treated in line with the historical average (24x pe), and should guarantee an eps growth of 12% with a dividend yield of 4%», they concluded.

At the Madrid stock exchange, Inditex shares reached a price of 52.3 euros, closing the last session down 1.21%. In one year, the stock has seen its value increase by 58.15%, reaching a capitalization of 162.8 billion euros. «Inditex currently has a higher rating than its clothing or even luxury sector colleagues, but we believe that most of the above positive factors are already priced at current multiples», said Barclays in its latest report. «Based on our estimates, the stock is treated at a p/e for the year 2025 of 22.8x compared to a five-year average of about 22x. We reiterate the equal weight rating. We reduce the outlook for this year’s eps due to more negative exchange rate expectations and a net financial income lower than expected, but the estimates for the following two years remain unchanged». (all rights reserved)

Federica Camurati