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Zara Owner Inditex Set to Benefit from Higher Prices

A man walks past a Zara retail store, with its shutters drawn, at a mall in Caracas September 30, 2014. REUTERS/Carlos Garcia Rawlins/File Photo
A man walks past a Zara retail store, with its shutters drawn, at a mall in Caracas September 30, 2014. REUTERS/Carlos Garcia Rawlins/File Photo
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Zara Owner Inditex Set to Benefit from Higher Prices

A man walks past a Zara retail store, with its shutters drawn, at a mall in Caracas September 30, 2014. REUTERS/Carlos Garcia Rawlins/File Photo
A man walks past a Zara retail store, with its shutters drawn, at a mall in Caracas September 30, 2014. REUTERS/Carlos Garcia Rawlins/File Photo

Fashion giant Zara's owner Inditex is expected to report bumper first-quarter earnings next week, benefiting from raising prices more than rivals without damaging its sales, analysts said.

As a cost of living crisis intensifies across the region, Europe's retailers are facing a tricky balancing act between passing on rising supply chain costs to consumers and ensuring that their products stay affordable.

The Russia-Ukraine conflict and COVID-19 lockdowns in China have added to pressures. But Inditex, best-known for the fast-to-market Zara brand which provides 71% of its sales, has staged a faster recovery than most, Reuters quoted analysts as saying.

The company was still well-placed to take market share because its prices remained competitive and consumers liked its rapid output of new fashion lines, RBC analyst Richard Chamberlain said in a research note.

"We expect Inditex's sales outperformance to widen in a downturn, as it did in the financial crisis of 2008 and 2009," he said. "Consumers that have been stuck at home for two years are looking to replenish their wardrobes."

Zara has lifted its starting prices by 10% or more from a year ago each month since January, according to UBS research. In April, its starting prices rose by an average 18.5%, the data showed. The research monitors prices on Zara's websites across 12 key markets.

In contrast, average retail prices across European apparel brands, including its closest rivals H&M and Zalando, rose 4.2% in April, the research showed. Euro zone inflation was at a record high of 7.4% that month, according to the European Union's statistics agency.

Inditex reports first quarter results on June 8. Analysts are expecting a 93% rise in net profit to 812 million euros ($866 million), according to Refinitiv data. Sales are expected to rise by 27% to 6.2 billion euros. Last year's performance was affected by store closures during the pandemic.

Inditex halted operations in Russia, closing online operations and 502 shops after Moscow's invasion of Ukraine and the imposition of Western sanctions. The Russian market accounted for 5% of its sales growth from Feb. 1 to March 13 this year, the company said.

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Fashion

80-year-old LL Bean Staple Finds New Audience as Trendy Bag

Gracie Wiener poses with some of her tote bags in Washington Square Park in New York, Wednesday, July 17, 2024, (AP Photo/Pamela Smith)
Gracie Wiener poses with some of her tote bags in Washington Square Park in New York, Wednesday, July 17, 2024, (AP Photo/Pamela Smith)
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80-year-old LL Bean Staple Finds New Audience as Trendy Bag

Gracie Wiener poses with some of her tote bags in Washington Square Park in New York, Wednesday, July 17, 2024, (AP Photo/Pamela Smith)
Gracie Wiener poses with some of her tote bags in Washington Square Park in New York, Wednesday, July 17, 2024, (AP Photo/Pamela Smith)

L.L. Bean created it 80 years ago to haul heavy blocks of ice. Now it's a must-have summer fashion accessory, The Associated Press reported.

The simple, sturdy canvas bag called the Boat and Tote is having an extended moment 80 years after its introduction, thanks to a social media trend in which they're monogrammed with ironic or flashy phrases.

New Yorker Gracie Wiener helped get it started by ordering her humble bags from L.L. Bean monogrammed with “Psycho” and then “Prada,” the pricey Italian luxury brand, instead of just her name or initials, and posting about them on Instagram. Then others began showcasing their own unique bags on TikTok.

Soon, it wasn’t enough to have a bag monogrammed with “Schlepper,” “HOT MESS,” “slayyyy” or “cool mom.” Customers began testing the limits of the human censors in L.L. Bean’s monogram department, which bans profanity “or other objectionable words or phrases,” with more provocative wording like “Bite me,” “Dum Blonde” and “Ambitchous.”

Social media fueled the surge, just as it did for Stanley’s tumblers and Trader Joe’s $2.99 canvas bags, which were once selling on eBay for $200, said Beth Goldstein, an analyst at Circana, which tracks consumer spending and trends.
The tote’s revival came at a time when price-conscious consumers were forgoing expensive handbags, sales of which have weakened, and L.L. Bean’s bag fit the bill as a functional item that’s trendy precisely because it’s not trendy, she said. L.L. Bean's regular bags top out at about $55, though some fancier versions cost upward of $100.
“There’s a trend toward the utilitarian, the simple things and more accessible price points,” she said, and the customization added to the appeal: “Status items don’t have to be designer price points.”

L.L. Bean’s tote was first advertised in a catalog as Bean’s Ice Carrier in 1944 during World War II, when ice chests were common. Then they disappeared before being reintroduced in 1965 as the Boat and Tote.

These days, they’re still made in Maine and are still capable of hauling 500 pounds of ice, but they are far more likely to carry laptops, headphones, groceries, books, beach gear, travel essentials and other common items.

Those snarky, pop-oriented phrases transformed them into a sassy essential and helped them spread beyond Maine, Massachusetts’ Cape Cod and other New England enclaves to places like Los Angeles and New York City, where fashionistas like Gwyneth Paltrow, Reese Witherspoon and Sarah Jessica Parker are toting them — but not necessarily brandished with ironic phrases.

“It’s just one of those things that makes people smile and makes people laugh, and it’s unexpected,” said Wiener, who got it all started with her @ironicboatandtote Instagram page, which she started as a fun side hustle from her job as social media manager for Air Mail, a digital publication launched by former Vanity Fair Editor-in-Chief Graydon Carter.

The folks at L.L. Bean were both stunned and pleased by the continuing growth. For the past two years, the Boat and Tote has been L.L. Bean’s No. 1 contributor to luring in new customers, and sales grew 64% from fiscal years 2021 to 2023, spokesperson Amanda Hannah said.

The surge in popularity is reminiscent of L.L. Bean’s traditional hunting shoe, the iconic staple for trudging through rain and muck, which enjoyed its own moment a few years back, driven by college students.