Fashion chain Zara on fast track to profit

John Dagge
June 03, 2013
Herald Sun

FAST fashion chain Zara has bucked the retail gloom in Australia, clocking up more than $100 million in sales and almost doubling its profit in a year.

Revenue at the Australian arm of the Spanish retail giant surged to $106.8 million in the year to January as its store rollout continued.

Net profit jumped from $9.3 million to $18 million.

The youth-oriented fashion chain opened three new stores last year to take its network to six, hiring 160 new employees in the process.

Zara’s workforce now stands at 482.

Its accounts reveal the Australian branch paid $7.7 million in income tax – close to double that paid by the international internet giant, Google, which generated revenue of about $2 billion in Australia last year.

Zara’s results stand in stark contrast to more established bricks-and-mortar retailers in Australia that have suffered sharp profit slides in recent years.

Full-year profit at Myer fell more than 14 per cent to $139.3 million last year.

Worse, however, was rival David Jones with full-year profit down 40 per cent to $101 million.

Zara, which opened its first store in Australia in April 2011, has been at the forefront of a fierce push into the local market by a host of foreign retail brands.

UK retailer Topshop and US label GAP are among the other interlopers, while European fashion goliath H&M will open its first store early next year.

Zara has quickly cemented itself as a profitable enterprise in Australia.

In 2010, it posted an annual loss of $1.4 million – before it opened its first store in Sydney – but was in the black a year later with an annual profit of $9.3 million from three stores.

The Australian Zara chain is 20 per cent-owned by Peter Lew, son of rag trade king Solomon Lew.

Solomon Lew’s Premier Investments group owns the Just Jeans, Portmans and Dotti bands.