, Columnist
Zara Loses Its Zip
Inditex is subject to a heap of margin pressure
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It's not just hemlines that are coming down at Inditex. Profitability has been pummeled by the strong euro.
The company produces about 60 percent of its garments close to its headquarters in northwest Spain, but sells globally. A stronger euro should necessitate price increases, but it chooses not to pass higher costs on, pressuring margins. What's more, as it only sources about 30 percent of its products from Asia, compared with about 80 percent at rival Hennes & Mauritz AB, it will benefit less from a weaker dollar.