Uniqlo threatens Inditex’s leadership for profitability in the textile sector

Inditex consolidates its leadership in profitability in the textile sector against all its rivals, but Uniqlo is getting closer. If the Galician fashion giant has reached a profit margin of 13.5%, the Japanese company is already on its heels with 11.8%.

Inditex achieved a turnover in the first nine months of the year of 23,055 million euros with a profit of 3,110 million, while Uniqlo, which has just closed its last fiscal year, reached sales of 16,296 million euros and a net result of 1,935 millions. The distance narrows because just a year ago Inditex had a margin of 13% and that of Uniqlo was almost five percentage points, with 8.2%.

Lower profitability

Although the business is not strictly the same because it sells for third parties, the next most profitable textile chain is Levi’s, which has 500 stores in the world. With sales of 4,266 million euros and a net profit of 1,935 million, its profit margin stands at 9.14% in the first nine months of its fiscal year. Contrary to what happens with Inditex or H&M, Levi’s is also reducing its margins, since at the end of the same period of the previous year it reached 9.5%.

In terms of margins, those who are lagging further and further behind are the Swedish H&M and the North American GAP. H&M’s turnover increased by 11.8% in the first nine months, from 12,705 million euros to 14,404 million euros. But the result fell 87%, to 396 million, which has caused a sharp drop in its profitability, which has fallen by half, from the 5.83% it had a year ago to the current 2.75%.

GAP, in any case, is the worst positioned in this regard. In 2021, the textile company closed its fiscal year with losses of 615 million euros, despite having a turnover of 12,764 million. Now, although in 2022 it has managed to improve its financial situation, the latest available data reflects a tiny profit margin. Specifically, 0.62%. The North American achieved a positive net result of 66.3 million, although sales decreased by 20.4% compared to the previous year, reaching 10,624 million euros. Of which there is no data is of the China Shein, since it is not listed, although according to its estimates its sales would have already reached 24,000 million euros.

Inditex, which in addition to profitability is also a leader in sales worldwide, maintains that these results are an example of “the strength of the unique model: collections with a high fashion component, an attractive shopping experience and a highly committed human team to achieve profitable and sustainable growth.

Zara’s value

But beyond the figures, the textile giant chaired by Marta Ortega also maintains Zara as the most valuable brand in Spain for the fifth consecutive year. According to the ranking of the top 30 Spanish brands presented last week by Kantar Brandz, Zara remains at the top of the podium with a value of 18,856 million dollars (17,441 million euros).

Within the top 10 are also Movistar, Iberdrola, Santander, BBVA, Endesa, Naturgy, Repsol, Mercadona and Caixabank. In general, the ranking of brands is led by three categories: banking, energy and retail; although from Kantar they recognize the absence of premium or technological brands as in other countries.