Inditex Enters The Cosmetics Business With Zara Beauty

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T.C. | The world leader in the textile sector, Inditex, today announced its foray into the world of cosmetics from Wednesday 12 May, with the launch of a new cosmetics line, Zara Beauty. It “will be integrated as another section and will be available online in all European markets, USA, Canada, China, South Korea, Japan, Mexico, Australia and New Zealand.” Later, it will be incorporated in all countries and have its own space in shops.

In principle, the launch will take place in 22 centres in different countries with “lipsticks, make-up, balms, oils, powders, long-lasting nail polishes and brushes designed by make-up artist Diane Kendal.” The packaging is made of refillable and reusable glass containers. The shops chosen in Spain are Serrano (Madrid), Paseo de Gracia (Barcelona), Marina Banús (Marbella) and Compostela and Sánchez Bregua (both in A Coruña).

Zara Beauty is a major breakthrough into a market where margins are wide – although it intends to do so at affordable prices – and where analysts see potential. According to Renta 4 analysts, “the news is positive. We believe the bet makes strategic sense and would fit well within the group’s product offering. We are pleased the company has decided to start this project in a small number of markets, in order to see how it evolves. We believe that the cosmetics market is attractive, with a very high turnover (8 billion euros of sales in 2020 in Spain alone). And despite the fact the sale of these products is currently very affected by Covid 19 (with the use of masks), the return to normality will be a fundamental support”.

In 2020, Inditex recorded sales of 20.402 billion euros, a decrease of 27.9% and a gross margin of 11.390 billion (-27.9%), representing a margin of 55.8% (vs 55.9% in 2019); Ebitda was 4.552 bilion euros (-40.1%); EBIT stood at 1.507 billion and pre-tax profit was 1.106 billion (-69.6%). Net cash amounted to 7.560 billion euros (vs 8.060 billion in 2020).

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