The Fashion Retailer

Revenue Growth Analysis Of World Largest Fashion Retailers

Revenues of leading apparel retailers from 2000 to 2016 in trillions of yen (the chart is updated with 2016 revenues – exchange rate of August). Inditex keeps the first position and pulls ahead of its rival H&M. Meanwhile, Fast Retailing reaches the third position in the ranking. GAP struggled to adapt to fast-fashion competitors and closed many stores in 2016. It’s important to emphasize that H&M and Inditex are much more internationalized than their competitors.

2016 Revenues of Inditex, H&M, Fast Retailing and GAP

See the charts below: GAP core market is USA (69% of its stores: 2.909 stores in North America from a total of 4.242 worldwide in 2016. Revenues from USA represent 77% of GAP’s sales) and Fast Retailing is concentrated in Japan (58% of their revenues in 2016). Outside their own countries, Fast Retailing is carefully selecting locations to open their new stores (e.g. Opening soon in Barcelona) and GAP is trying to grow through joint ventures like the one with El Corte Inglés in Spain.

2016 Sales of global leading retailers by Region.

But reality is that geographic borders have a huge impact on the fashion retailer industry because of culture, religion, demographic trends, exchange rates, maturity level of the market, lifestyle, product sizes, weather, amongst other.

Inditex net sales by square meter from 2011 to 2016

EBITDA evolution from 2012 to 2016 of Fast Retailing, GAP, H&M and Inditex

Inditex EBITDA in 2016 is 54% higher than H&M and the distance between them is increasing since 2014. In 2016, Fast Retailing is expected to overtake GAP for the first time.

Top leading fashion retailers Net Income from 2012 to 2016

Inditex is leading Net income growth too. The Spanish giant fashion retailer’s net income is 66% higher than H&M one, while Fast Retailing already surpassed Gap in 2016. From 2015, Inditex Net Income increased a 10% while H&M remained stable. Fast retailing Net income grew +100% and GAP increased a 2%.

In 2016, Return on Sales (ROS, net income/sales) ratio from the groups above is the following: Inditex (14%), H&M (9%), Fast Retailing (5%) and GAP (4%). It’s surprising to see how Inditex has a similar Gross Margin than H&M but a Return on Sales +5% percentage points higher.

Total number of stores in 2016 of the top leading fashion retailers

Inditex footprint is, by far, the highest in terms of store presence with 7.292 stores compared to its rival H&M that has 4.251 stores in 2016. But also, according to revenues we can deduct that revenues by stores are higher in H&M. Inditex ratio revenue/stores is €3,2 Million and H&M ratio is €4,6 Million by store.

Inditex and H&M footprint from 2012 to 2016

Inditex footprint presence (number of stores) is increasing +4% from 2015 to 2016, while H&M +11% during the same period.

The State of Inditex

Inditex brand portfolio Net Sales from 2012 to 2015: Bershka, Massimo Dutti, Pull&Bear, Stradivarius, Zara Home, Oysho and Uterqüe

Zara, inditex’s leading brand, grew by +18% from 2015 to 2016 till €13,6 Billion.

Inditex revenue, EBIDTA, EBIT and Net Income from 2012 to 2016.

Main financial indicators evolution (2012-2016) of Inditex in the P&L.

Comparison of EBIT/Sales ratio from luxury fashion retailers, Bottega Veneta, Gucci and Hermés, and mass-market retailer Inditex. Hermés and Gucci increases their ratio while Inditex ratio is almost stable.

So, one more year, Inditex keeps the first position in the global leading fashion retailers ranking, growing at a highest rate than its rival H&M in almost every key performance indicator. Fast Retailing is overtaking GAP and is looking for global expansion with a different approach to fashion than H&M or Inditex. Fast Retailing is about technical fabrics and innovation and not fast-fashion oriented. Uniqlo will open its first store in Barcelona in autumn 2017.

Sources of information:

• Euromonitor
• Annual reports