FINANCIAL ANALYSIS OF INDITEX

Financial Analysis of Inditex

Executive summaryiv

Introduction1

Zara1

Pull & Bear2

Massimo Dutti2

Beshka2

Stradivarius2

Oysho3

Zara Home3

Uterque3

SWOT analysis4

Strengths4

Weaknesses5

Opportunities5

Threats6

PESTEL analysis6

Political7

Economic factors7

Social factor7

Technological factor8

Environmental factors8

Legal factors9

Porter's five forces model9

Financial ratios11

Profitability ratio11

Liquidity ratio13

Debt management14

Asset management14

Conclusion and recommendation15

Activity based costing (ABC)15

ABC versus traditional costing16

Executive summary

Inditex is a global textile group present currently in more than 86 markets globally. It is the world's largest fashion retailer operating with 8 different store styles named as Pulls & Bear, Zara, Massimo Dutti, Stradivarius, Bershka, Uterqiie, and Zara Home. This group consists of 100 different companies working in distribution, manufacturing and textile designing. The group's success is based on its innovative business models and flexibility that makes this group market leader in fashion industry.

The company overall progress is satisfying, and it is attractive investment for investors. However, there is a major threat to company is its overdependence on European markets. Inditex need to focus on other markets such as Asian markets to perform better in economic downturn of one market. Inditex also faces tough competition from its competitors which are present globally as well as in national levels. These competitors are giving tough time to Inditex. Inditex should be dynamic and proactive in creating new trends in fashion industry to become market leader and hold better market share.

Financial Analysis of Inditex

Introduction

Inditex is a global textile group present currently in more than 86 markets globally. It is the world's largest fashion retailer operating with 8 different store styles named as Pulls & Bear, Zara, Massimo Dutti, Stradivarius, Bershka, Uterqiie, and Zara Home. This group consists of 100 different companies working in distribution, manufacturing and textile designing. The group's success is based on its innovative business models and flexibility that makes this group market leader in fashion industry (Inditex, 2013a).

The history if Inditex group has its roots in Spain from opening of first Zara shop in 1975 at A Coruna. A Coruna later became headquarter of the group. Now, Inditex is operating its retail network worldwide in five continents and present at prime locations of more than 400 countries.

Amancio Ortega Gaona is the founder and chairman of Inditex. He started his career as textile manufacturer in clothing side. From 1963-1974 his business grew slowly and he owned number of factories distributing their products to various European countries. Various concepts of the Inditex are further explained as below with their ideology and history (Inditex, 2013a).

Zara

Zara was the first concept store by Inditex open in Spain in 1975. Now, Zara has its retail network more than 87 countries at prime locations of cities with more than 1721 outlets. The concept of the Zara it based on customer thinking of fashion. This made Zara the world's largest fashion brand. The store shares the needs of the customer with consistent flow of information (Zara, 2013).

Pull & Bear

To focus on the needs of the young people of the world Pull & Bear was first launched in 1991. The main focus of this concept store is to focus on casual wear needs of the young ...