Case | HBS Case Collection | June 2013 (Revised March 2014)

Inditex: 2012

by John R. Wells and Galen Danskin

Abstract

In the 11 years since its public offering, Inditex and its flagship brand, Zara, had expanded into 86 countries, achieved $21.6 billion in revenue, and become the largest specialty apparel retailer in the world. In marked contrast to the general malaise of the Bolsa de Madrid, Inditex's share price tripled from 2008 to 2012 and traded at 25 times expected 2013 earnings, a 15% premium over Swedish rival, H&M. From 1,080 stores in 2000, it had expanded to 6,009 locations while sales and operating profits grew 25% p.a over this period. It had also established online stores across 23 different markets, with plans for launches in Russia and Canada during 2013, and it managed eight different brands. CEO Pablo Isla remained confident of future success and anticipated store expansion would continue growing at 8%-10% per year for the next three to five years. How could Inditex best maintain its strong growth and fend off competition?

Keywords: strategy; fashion; Fashion Industry; Strategy; Strategic Planning; Competitive Strategy; Fashion Industry; Spain;

Language: English Format: Print 32 pages EducatorsPurchase

Citation:

Wells, John R., and Galen Danskin. "Inditex: 2012." Harvard Business School Case 713-539, June 2013. (Revised March 2014.)

Related Work

  1. Case | HBS Case Collection | June 2013 (Revised March 2014)

    Inditex: 2012

    John R. Wells and Galen Danskin

    In the 11 years since its public offering, Inditex and its flagship brand, Zara, had expanded into 86 countries, achieved $21.6 billion in revenue, and become the largest specialty apparel retailer in the world. In marked contrast to the general malaise of the Bolsa de Madrid, Inditex's share price tripled from 2008 to 2012 and traded at 25 times expected 2013 earnings, a 15% premium over Swedish rival, H&M. From 1,080 stores in 2000, it had expanded to 6,009 locations while sales and operating profits grew 25% p.a over this period. It had also established online stores across 23 different markets, with plans for launches in Russia and Canada during 2013, and it managed eight different brands. CEO Pablo Isla remained confident of future success and anticipated store expansion would continue growing at 8%-10% per year for the next three to five years. How could Inditex best maintain its strong growth and fend off competition?

    Keywords: strategy; fashion; Fashion Industry; Strategy; Strategic Planning; Competitive Strategy; Fashion Industry; Spain;

    Citation:

    Wells, John R., and Galen Danskin. "Inditex: 2012." Harvard Business School Case 713-539, June 2013. (Revised March 2014.)  View Details
    CiteView DetailsEducatorsPurchase Related

  2. Case | HBS Case Collection | May 2018

    Inditex: 2018

    John R. Wells, Galen Danskin and Gabriel Ellsworth

    In 2018, Inditex, based in Spain, was the largest specialist fashion retailer in the world, generating sales of $31.5 billion in 2017 from a portfolio of eight retail brands selling through a total of 7,475 stores located in 96 countries and from websites in 49 countries. Its largest brand, Zara, generated sales of $20.8 billion and operated 2,118 stores. Since its IPO in 2001, Inditex had grown sales an average of 14.3% per year and net profits by 16.3% per year, adding over 6,000 stores in the process, and its stock had significantly outpaced the FTSE 100. While many fashion retailers were retreating in the face of weak demand and competition from online retailers, Inditex grew like-for-like sales for the year in all concepts and geographies. Online sales were up 41% year-on-year, reaching 10% of total sales.
    For several years, the company had been slowing the growth in retail space and investing in large flagship stores to support its online business. Significantly, in late 2016 Inditex closed four small Zara shops in the company’s hometown of La Coruña and opened a 54,000-square-foot store in its place. Indeed, in the last quarter of 2017, the net number of store additions turned negative for the first time.
    Meanwhile, online fashion specialists such as U.K.-based ASOS were growing rapidly, adding thousands of styles a week to their websites and providing thousands of pick-up and drop-off points (PUDOs) at local retail locations around the world to support their online sales. And then there was the threat of Amazon, which had been pushing into online fashion for over a decade. Was Inditex chairman and CEO Pablo Isla doing enough to turn the online threat into an opportunity?

    Keywords: fashion; Fashion Industry; succession; IPO; Competition; Initial Public Offering; Multinational Firms and Management; Management Succession; Growth and Development Strategy; Competitive Strategy; Apparel and Accessories Industry; Retail Industry; Fashion Industry;

    Citation:

    Wells, John R., Galen Danskin, and Gabriel Ellsworth. "Inditex: 2018." Harvard Business School Case 718-515, May 2018.  View Details
    CiteView DetailsEducators Related

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John R. Wells
Professor of Management Practice
Strategy

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