Zara Is Still Growing, But Not as Fast as H&M

Sales at Zara's parent company, Inditex, increased 8 percent globally last year.
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Lauren Indvik
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Sales at Zara's parent company, Inditex, increased 8 percent globally last year.
A sketch of the future SoHo Zara flagship location. Photo: Inditex

A sketch of the future SoHo Zara flagship location. Photo: Inditex

In the game of retail, the ball is still in fast fashion's court. 

On Wednesday, Spanish conglomerate Inditex, the owner of Zara and a handful of other fast fashion brands, said net sales increased 8 percent to $19.2 billion over the 12 months ending Jan. 31. That's a nice piece of news after a disappointing 2013, when sales only grew by 5 percent. 

Zara, by far company's biggest brand, saw sales increase by 7 percent, up from an increase of just 2 percent the year before. But while that's good progress, it's not quite as good as the results from its biggest competitor, H&M, which saw sales rise 14 percent in fiscal 2014.

To be fair, Zara and its parent company have not been investing in expansion as aggressively as H&M has, instead focusing on growing profit, which was up 5 percent in 2014. After opening 379 new stores in 2014, H&M is planning to add 400 locations to its network by December, putting its store count close to 4,000. Zara, meanwhile, has 1,923 locations. Inditex said it plans to open between 420 and 480 stores this year while closing (or, to put it in Inditex's terms, "absorbing") 80 to 100 smaller stores. It did not say how many of those will be Zara locations.

As for the wonderful world of online, Zara plans to keep on investing in its e-commerce platform, launching online stores in three new markets this year — Taiwan, Hong Kong and Macao — after doing the same in Mexico, South Korea, Romania and China last year.

For Inditex, the retail picture is clear. Instead of spreading its brands across as many locations as possible, the company is diving deep on massive flagship locations and online stores.