Zara-owner has online edge

(BVO) – A Coruña in the north-western corner of Spain, a tourist hotspot and home to Zara’s first store.

Just a short distance away in Arteixo, its parent company Inditex’s HQ.

A family owned business, founded in 1975, it’s now the world’s biggest fashion retailer.

Overall sales role 8 percent to over 18 billion euros, meeting expectations.

And full year profits for 2014 increased by 5 percent, largely thanks to an economic recovery in its biggest European markets.

Sarah Morris is Reuters retail correspondent in Spain.

Sarah Morris, Reuters Retail Correspondent, Spain:

“Inditex has had to extend this factory behind me and their headquarters by about 10 percent to 700 thousand square metres and that’s really because of the aggressive pace of their international expansion.”

Inditex employes around 600 designers.

They take inspiration from street fashion, music, magazines as well as the catwalk.

The secret of their success: ‘fast fashion’, delivering designs from factory to store within 2 weeks.

Anita Balchandani is from OC&C Strategy Consultants.

Anita Balchandani, Partner, OC&C Strategy Consultants:

“At the core of Inditex is an operating model that is still quite unique, quite differentiated and difficult for people to replicate. Which is their ability to get fantastic fashion really quickly.”

Inditex results comes after Swedish rival H&M reported a better-than-expected 15 percent rise in sales.

The world’s number two fashion retailer has also moved into Inditex’s ‘fast fashion’ space, offering new clothes daily in some of its stores.

Both are being challenged by online only brands like Germany’s Zalando and Britain’s Asos.

Still the Spanish fashion giant isn’t complacent.

It’s been discretely closing smaller branches and concentrating on big flagship stores.

Investors need not fear – the cash-rich retailer is planning to invest around 1.35 billion euros – that’s around 8 percent more than the previous year.