Inditex Valuation
Inditex Valuation
IE business school
7/24/2013
1. Background
1.1 Company overview
Inditex is one of the world largest fashion retailers with more than 5,500 stores in 86 countries. The most famous brand that Inditex owns is Zara which opened its first store in 1975 in A Coruña, Spain.
Besides Zara, Inditex also owns brands such as Pull&Bear, Massimo Dutti, Bershka, Oysho, Zara Home and Uterque. The growth of this company has been dramatically strong and steady for more than 10 years, focusing on Europe and the expansion of new markets such as Asia and Latin America. In 2012 the company achieved a turnover of 15,946 million euros and a net profit of 2,361 million euros. These prior figures included the fact that for the past 10 years the sales growth has maintained an average of 16% and the Net Income of 12%.
How are these numbers achievable? What is the competitive advantage of Inditex that makes them one of the biggest fashion businesses of the world? The answer to these questions is Inditex´ business s model. The key to this model is the ability to adapt the merchandise to the customers’ expectations and taste in only a few weeks. Also, merchandise arrives twice a week to each store, and not only contains current fashion but also new collections in order to refresh and update the store frequently. This speed has been impossible to imitate for the competitors who usually take around 3 to 6 months to renovate their merchandise. Besides this, the company also pays a lot of attention to designed space specifically to make customers have the best experience at shopping. By doing so, they also obtain direct point of sales information from the customer of what they like and don´ Finally, the business model is
t.
characterized as high vertical integration in every step of the process; design, manufacture, logistics and distribution and each of the stores has the ownership to manage it.
1.2 Macro-economic factors
Major macro-economic
IE business school
7/24/2013
1. Background
1.1 Company overview
Inditex is one of the world largest fashion retailers with more than 5,500 stores in 86 countries. The most famous brand that Inditex owns is Zara which opened its first store in 1975 in A Coruña, Spain.
Besides Zara, Inditex also owns brands such as Pull&Bear, Massimo Dutti, Bershka, Oysho, Zara Home and Uterque. The growth of this company has been dramatically strong and steady for more than 10 years, focusing on Europe and the expansion of new markets such as Asia and Latin America. In 2012 the company achieved a turnover of 15,946 million euros and a net profit of 2,361 million euros. These prior figures included the fact that for the past 10 years the sales growth has maintained an average of 16% and the Net Income of 12%.
How are these numbers achievable? What is the competitive advantage of Inditex that makes them one of the biggest fashion businesses of the world? The answer to these questions is Inditex´ business s model. The key to this model is the ability to adapt the merchandise to the customers’ expectations and taste in only a few weeks. Also, merchandise arrives twice a week to each store, and not only contains current fashion but also new collections in order to refresh and update the store frequently. This speed has been impossible to imitate for the competitors who usually take around 3 to 6 months to renovate their merchandise. Besides this, the company also pays a lot of attention to designed space specifically to make customers have the best experience at shopping. By doing so, they also obtain direct point of sales information from the customer of what they like and don´ Finally, the business model is
t.
characterized as high vertical integration in every step of the process; design, manufacture, logistics and distribution and each of the stores has the ownership to manage it.
1.2 Macro-economic factors
Major macro-economic