Zara will be back? Financial results of the group in Ukraine

13 August 2023

As early as autumn, Zara and other Inditex Group brands can resume the operation of retail outlets in Ukraine. We analyzed how much the group earned in our country before the full-scale invasion and what were the losses in 2022.

The Ukrainian Council of Shopping Centers hopes that the Inditex Group, which owns the well-known brands Zara, Bershka, Pull&Bear and others, will return to the Ukrainian market this fall.

The Spanish retail giant Inditex Group suspended its work in Ukraine with the start of a full-scale war. By February 24, 2022, 65 Inditex stores were operating in Ukraine - in 8 cities.

In general, before the invasion, the financial results of the group's operations in Ukraine were quite good. We especially note the year 2021, when the turnover of the operating company of the group - Inditex Ukraine - increased significantly compared to the previous year (2 billion UAH) and amounted to almost 3.2 billion UAH.

In year 2021, the operating profit of Inditex Ukraine was almost UAH 900 million (UAH 594 million in 2020), the net profit was UAH 717 million (UAH 483 million).

In recent years, the operating profitability of the company's activities has fluctuated around the 30% mark, which is, in our opinion, a good indicator, especially considering the rather good, for a clothing retailer, inventory turnover - in 2021, the average inventory period was 90 days.

The dynamics of revenues and net profit of Inditex Ukraine in recent years looked as follows:

Inditex Ukraine revenue, net profit 2022

In 2022, the company's revenue for the first two months of operation amounted to UAH 893 million, the operating loss for the year was UAH 464 million. Additional loss (shown in the statement as Other expenses) – UAH 334 million. As a result, the net loss of Inditex Ukraine for 2022 amounted to UAH 681 million.

Despite the suspension of operations, the company continues to pay for the lease of commercial space, as well as pay salaries to employees. In 2022, according to the company's financial statements, these payments were made at the expense of cash at the end of 2022 (315 million hryvnias), as well as credit lines drawdowns (437 million hryvnias).

For the owners of the shopping centers in which the company stores are located, the rent payment is certainly a positive factor, but on the other hand, they have lost stores that were strong generators of traffic for the shopping centers, so the indirect losses are still quite significant.

It should also be noted that after the beginning of Russia's invasion of Ukraine, the group withdrew from the Russian market and closed all its 240 stores.

Regarding the financial results of the entire group, according to the financial statements of the 2022 financial year (ended January 31, 2023), revenue of the Inditex Group increased compared to the previous year by 18% to 32.6 billion euros (sales in the Zara network increased by 21% to 23.7 billion euros), net profit - by 27% to 4.1 billion euros. At the end of January 2023, the total number of stores of the group's brands was 5,915.