Retail news from around the globe

Inditex shares fall despite strong sales

The world’s biggest fashion retailer, Madrid-based Inditex, has reported weaker-than-expected growth in profit margins in the first half of the year, knocking its shares nearly 4 per cent lower following the announcement, the Guardian newspaper reports. 

Inditex is the owner of Zara, Massimo Dutti and Bershka, among others. Buoyed by strong sales, which make it a stand-out performer in the struggling fashion space, Inditex shares have risen 28 per cent in the year to date.

Sales – in stores and online – increased 8 per cent in the first five weeks of the latest financial period. The full-year sales growth forecast is for 4 per cent to 6 per cent growth.

The retailer reported net profit of €1.55 billion ($2.5 billion) for the six months from February 1 to July 31, on sales up 7 per cent at €12.82 billion ($20.6 billion), broadly in line with analysts’ expectations.

The company said it had recently launched online stores in Bahrain, Oman and Kuwait and would do so in South Africa, Colombia and the Philippines this northern autumn.

GameStop console sales drop

Texas-based video game retailer GameStop has reported a bigger-than-expected quarterly loss, as the current console cycle nears its end and consumers increasingly shift to downloading games rather than physically buying them, Reuters reports. 

GameStop reported a 41 per cent fall in new hardware sales for the second quarter, as users preferred to wait for the next generation of Microsoft’s Xbox consoles and Sony’s PlayStation scheduled in 2020.

Streaming services bite into profit too – GameStop stock hit a 14-year low when Apple launched Apple Arcade. 

The company operates almost 6000 retail outlets throughout the world, and is the owner of EB Games in Australia.

GameStop reported a loss of US32¢ per share for the second quarter ended August 3, bigger than the average analyst loss estimate of US21¢.

The company’s revenue declined 14.3 per cent, with same-store sales falling 11.6 per cent.

Target lifts holiday hiring

US retailer Target says it is planning to hire more than 130,000 store employees for the holiday season – 10,000 more than last year – an indication of the company’s optimism despite a softening retail environment.

United Parcel Service, the world’s biggest parcel delivery firm, had already announced plans to hire 100,000 holiday workers.

Retail employment contracted for a seventh straight month in August to hit the lowest level since January 2016. Department store jobs, which have been hard hit by online competition, sunk to the lowest point since the US federal government started tracking the data in 1990.

The trade war with China has been taking its toll on the retail sector. “Retailers are still trying to minimise the impact of the trade war on consumers by bringing in as much merchandise as they can before each new round of tariffs takes effect and drives up prices,” National Retail Federation vice-president for supply chain and customs policy Jonathan Gold told Reuters.

The jobs at Target are paying US$13 an hour.

Amazon Prime to hit Brazil

Amazon has announced that it will launch its Prime subscription service in Brazil, a move that sent the shares of other Brazilian retailers tumbling.

Prime subscribers will have unlimited nationwide free shipping and a maximum 48-hour delivery time in over 90 municipalities for goods ranging from clothes to electronics.

They will also have access to movies, music, and digital books and magazines on the platform, as Amazon looks to compete with online streaming services like Netflix.

Amazon launched in Brazil in 2012 as a bookseller before adding other products to the platform, but it has struggled there, analysts say, largely because of logistical and tax issues, as well as the presence of intrenched incumbents.

JD Sports sales rise 10 per cent

JD Sports, Britain’s largest sporting goods retailer, has defied the nation’s retail gloom, posting like-for-like sales growth of more than 10 per cent for the first half of the year.

Analysts credit the boom in “athleisure” clothing for the success of the retailer, which bills itself “the undisputed king of trainers”. On the announcement, shares rose sharply, making JD Sports the biggest gainer on the FTSE 100 for the day.

The Guardian reports that JD is bringing forward plans to open a warehouse in mainland Europe as it gears up for Brexit. The 80,000sqf facility in Belgium will be up and running by early 2020.

JD’s run of success – profits have tripled over the past five years – pushed it into the FTSE 100 earlier this year. With a market value of more than £6 billion ($10.8 billion) it dwarfs rival Mike Ashley’s Sports Direct, which has shed more than a quarter of its value over the past year.

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