Industria de Diseño Textil, S.A.

Sector: Apparel specialty retail Countries of operation: Australia, Argentina, Aruba, Belgium, Canada, Cyprus, France, Germany, Greece, India, Israel, Italy, Japan, Jordan, Latvia, Luxembourg, Hong Kong, Hungary, Mainland China, Malaysia, Malta, Mexico, New Zealand, Nicaragua, Norway, Panama, Paraguay, Poland, Portugal, Rome, Russia, Saudi Arabia, Slovakia, South Africa, Spain, Sweden, Turkey, the UK, the US and Vietnam Key product categories: Accessories, apparel, footwear and household textile products Annual Metrics [caption id="attachment_151525" align="aligncenter" width="700"] Fiscal year ends on January 31 of the same calendar year
*Trailing twelve months ended on April 30, 2022[/caption]   Summary Founded in 1963 and headquartered in A Coruña, Spain, Industria de Diseño Textil (Inditex) is a retailer of accessories, apparel, footwear and household textile products. The company sells in stores and online under various brands, including Bershka, Massimo Dutti, Oysho, Pull&Bear, Stradivarius, Zara and Zara Home, across the Americas, Asia and Europe. As of April 30, 2022, the company operates 6,423 stores in 95 markets. Company Analysis Coresight Research insight: Inditex continues to capitalize on its unique business model. Zara, the company’s principal retail concept—which generates around two-thirds of its sales—operates a vertically integrated model, with in-house design and production capabilities. Zara takes around three weeks to move products from design to sale and the company replenishes stocks of existing designs twice a week, offering tremendous operational flexibility. This is helping the company to adapt to demand rapidly. Moreover, Inditex has continued to benefit from its broad range of brands and its geographic diversity. Its strategy focus on clear differentiation over value proposition has helped the company gain strong traction among its target niches. More than 50% of Inditex’s manufacturing is based in Europe, providing scope for greater quality control, which is an important aspect in providing its differentiated strategy. Furthermore, Inditex’s substantial digital investments in recent years have helped the company to fulfill large quantities of online orders, manage inventory efficiently and control online delivery costs, and ultimately achieve higher margins. In its first quarter of fiscal 2022 (ended April 30, 2022), the company’s sales increased by 36% year over year and net profit grew 81% as consumers refreshed their wardrobes with the easing of pandemic-related restrictions in Europe. We believe Inditex will continue to grow in the near future, boosted by its product differentiation and ambitious digitalization strategy.

Tailwinds	Headwinds
Integrated business model, with in-house design and manufacturing capabilities Growing online presence Flexible supply chain model helps manage inventory levels, preserve cash position and margins Opportunities for expansion in the US and Asia	Strong competition in apparel and footwear retail Fast-changing fashion trends High global inflationary environment and geopolitical uncertainty Fluctuation in foreign exchange rates

  Strategy In January 2022, Inditex unveiled its strategic priorities aimed at enhancing the customer experience and integrating its online and offline channels. The company’s strategy centers on the following four focus areas: Expand sustainable initiatives

• Focus on garment reuse and recycling, the full engagement of suppliers in sustainable production efforts, energy savings and renewable energy consumption projects.
• Ensure use of 100% renewable energy by the end of 2022.
• Use 100% more sustainable cotton by 2023.
• Eliminate single-use plastics in customer packaging by 2023.
• Use 100% sustainable cellulosic fibers by 2023.
• Reduce water consumption in supply chain by 25% by 2025.
• Use 100% recycled or sustainable polyester/linen in products by 2025.
• Use 100% of recycled packaging materials across the supply chain by 2025.
• Achieve net-zero carbon emissions by 2040.

Invest and enhance digital capabilities

• Develop e-commerce to account for more than 30% of total sales by fiscal 2024, from 26% in fiscal 2021.
• Continue to enhance the group’s proprietary digital operating system “Inditex Open Platform,” which is flexible and scalable, to ensure service during peak traffic periods and enable the development of tailored projects in response to specific business needs.
• Develop a global digital sales footprint that is integrated, flexible and sustainable.
• Use technology advancements to offer personalized customer experience online.

Invest substantially and ensure sustainable earnings growth

• Ensure sustainable earnings growth, including strong business performance, enhanced profitability, a sustainable supply chain, a stable dividend policy and free cash-flow generation for reinvestment in business growth.
• Incur capital expenditure of €1.1 billion ($1.3 billion) in fiscal 2022, mainly spent on product differentiation, innovative technologies and sustainability.

Develop internal talent and nurture their abilities

• Commit to internal talent development, including in-house promotions and training and new high-skill jobs for online and sustainability strategies.
• Continue to ensure an inclusive and respectable environment where talent is appreciated, regardless of gender expression and sexual orientation.

Revenue Breakdown (FY21) Company Developments

Date	Development
June 18, 2022	Zara announces the launch of “Pink Party” dresses, a limited-edition clothing line made fabric featured recaptured greenhouse gases.
May 12, 2022	Inditex enters into a €100 million ($120 million), three-year agreement to purchase 30% of Infinited Fiber Company's annual production volume of Infinna, a textile fiber, which is created from 100% textile waste.
April 21, 2022	Inditex steps up its commitment to research talent in the university arena by rolling over its €1.5 million ($1.8 million) InTalent program, which will allow Universidade da Coruña (UDC) to hire 15 “excellent” researchers.
April 8, 2022	Zara and Stradivarius open two new stores (one store each) at Edificio España in Madrid. The company stated that both stores combined added about 300 employees across 20 nationalities and introduced innovative technological updates to offer an integrated experience with their online platforms.
April 1, 2022	Inditex appoints Marta Pérez as Chairperson. Pérez has worked in different areas of the company for the past 15 years and has led in the bolstering of Zara's brand image and fashion proposition.
December 22, 2021	Inditex announces plans to open a new building spanning 170,000 square meters to house the Zara sales and design teams within the company’s complex in Arteixo. The new facility will entail an investment of €238 million ($286 million). The construction began in January 2022 and the company expects the facility to be completed by early 2024.
November 30, 2021	Inditex promotes Óscar Maceiras, General Counsel and Secretary of the board, to the position of CEO, effective immediately. Prior to joining Inditex, Maceiras was a Spanish State Attorney and worked for Spanish bank Banco Santander.
November 4, 2021	Zara opens its new concept store in Dublin’s Liffey Valley Shopping Center, marking its first concept store in Ireland. The new store spanning over 30,000 square feet will feature digital technologies, including automated pick-up point for online orders, to integrate the store with online shopping.
October 21, 2021	Inditex commits to use ocean freight services powered by zero-carbon marine fuels by 2040.
October 15, 2021	Inditex starts charging €0.10 ($0.12) for paper bags in over 1,400 of its shops in Spain as part of a push for packaging reuse and sustainability.
July 13, 2021	Inditex ramps up its sustainability initiatives, moving forward its zero net emissions target to 2040, from 2050 earlier.
July 9, 2021	Zara launches its Store Mode functionality in the UK, connecting its website and app with its physical stores in the country. The technology allows consumers to check store’s inventory in real time through the Zara website and app, and purchase and pick up the available items on the same day.
May 22, 2021	Inditex closes all its stores in Venezuela as the deal between the company and its local partner Phoenix World Trade comes under regulatory review.
April 22, 2021	Inditex presents a project to install three wind turbines in A Coruña to the Port Authority of the city. These windmills will generate sustainable energy for Inditex headquarters in Arteixo (including its distribution center, factories and offices) and the port facilities of Punta Langosteira, A Coruña.
February 4, 2021	Inditex China announces that it will further invest in digitalizing physical stores and integrating physical and digital channels.
January 29, 2021	Inditex joins the MIT Climate and Sustainability Consortium, which aims at accelerating large-scale implementation of solutions to address the threat of climate change.
January 7, 2021	Inditex plans to shut all of its physical Bershka, Pull&Bear and Stradivarius stores in China by the end of January 2021. The company’s official website and Tmall stores will remain operational, while its other brands will retain their physical presence in China.
October 20, 2020	Zara opens Asia’s largest store, which spreads over 37,000 square feet across four floors, in Beijing. The new store aims to promote sustainability through technology that minimizes water and energy consumption.
June 10, 2020	Inditex plans to close 1,000–1,200 stores as the retailer looks to increase its e-commerce penetration to 25% by 2022, versus 14% in 2019. The majority of store closures will be in Asia and Europe (excluding Spain). The company plans to utilize larger stores as distribution hubs for online sales.

  Management Team

• Óscar Maceiras—CEO
• Marta Pérez—Chairperson
• Pablo Isla—Executive Chairman
• José Sierra—Deputy Chairman
• Ignacio Fernandez—CFO
• Lorena Castro—Chief Logistics Officer
• Gabriel Marina—Chief Information Technology Officer

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Source: Company reports/S&P Capital IQ