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Zara continues assault on UK market

Zara has continued to grow its UK market share with sales of its UK subsidiary rising by 8% to £535.2m for the year to January 31 year on year, while gross margin grew by 140 basis points to 56.6%.

The UK subsidiary of the Spanish fast fashion retailer grew pre-tax profits by 18% to £58.3m during the period.

It opened two stores during the year, in Guildford and London’s Oxford Street, as well as refurnishing its units in Birmingham, Belfast, Westfield London, Covent Garden and Regent Street.

The company said it plans to open further stores as “suitable opportunities” arise, and ended the period with 68 stores.

It said the focus for the foreseeable future is on strengthening profitability through sales growth, while keeping operating expenses under tight control to increase operating margins.

Zara UK increased its headcount by 308 during the period, equivalent to 3,158 full-time positions. It paid the Spanish parent company dividends of £47m, up from £43m in 2015.

Inditex’s other fascias had mixed fortunes in the UK: Stradivarius increased total sales by 93% to £3.1m for the same period, during which it had one store at Westfield Stratford City.

Pre-tax profit grew from £2,000 in 2015 to £141,000. Stradivarius opened a second store, its biggest global flagship to date, on London’s Oxford Street, at the beginning of June and will open at Intu Trafford Centre in Manchester and Belfast later this year.

Massimo Dutti, which has 12 stores in the UK, made total sales of £33m, down 0.4% on the previous year, while pre-tax profits fell from £1.7m in 2015 to £502,000.

It is set to open two new stores in Glasgow and Guildford this year.

Pre-tax losses increased to £4.6m at Bershka, which operates seven stores in the UK, from £1.9m in 2015, as sales fell 1.2% to £16.4m.

Pull & Bear, which also has seven stores, increased sales by 1.1% to £18.7m year on year, but pre-tax losses grew to £277,000 from £76,000 in 2015.

The fascia is set to open another store at Intu Trafford Centre later this year too.

Average gross margins were 60.1% at Massimo Dutti, 59.8% at Bershka, 58.3% at Pull & Bear and 56.4% at Stradivarius, the latest results for the year ended January 31 filed at Companies House show.

Inditex’s other fashion fascias, accessories retailer Uterqüe and homeware and lingerie retailer Oysho both do not currently have a physical presence in the UK but do sell online.

Inditex announced last week that group net sales rose 12% year on year to €4.9bn (£3.9bn) in the first quarter of 2016 as it expanded its reach to 90 markets, including Aruba and Nicaragua.

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