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Online Shoppers unhappy with Zara's offerings

Zara's push towards online shopping exposes issues with the retailer’s fit, product quality and service.

The recent shift to online shopping isn’t working in the interest of retail brand Zara, as its exposes its issues with the fit, product quality and online service, according to Credit Suisse analyst Simon Irwin.

Comments about Zara products “are poor and declining” on consumer-review websites Trustpilot and Sitejabber, the analyst wrote in a note previewing owner Inditex SA’s first-half results on Sept. 12.

“We believe the ‘treasure trove’ nature of a Zara shop is still a better experience off-line,” Irwin wrote. While online is driving like-for-like sales growth, that can have a negative impact on gross margin, he also said.

The broker estimates that the Web will represent about 10 percent of Inditex’s sales this year, up from 2.4 percent in 2013. It also expects 2018 to be the sixth consecutive year of Ebit margin decline.

Inditex shares had their worst week in seven years last week, falling 8.7 percent after Morgan Stanley published a scathing report saying the retailer has gone from great to good.

Credit Suisse lowered its price target to 24 euros from 25 euros and maintained its underperform recommendation.

Related News

Versace sold!

Michael Kors ( Capri Holding ) is in the process of buying Italian fashion house Versace for a value of approximately $2.12 billion, including debt, the company announced on Tuesday. That's 2.5 times the brand's current revenue. The primarily cash deal is expected to close in the fourth quarter of 2019.

In a presentation released to investors, Capri Holdings, outlined its plans for Versace, including increasing its global retail footprint from 200 stores to 300, building out e-commerce and expanding men's and women's accessories and footwear.

Under the new organisation, John D Idol will remain chairman and chief executive of Capri Holdings and also chief executive of the Michael Kors brand. Versace chief executive Jonathan Akeroyd will continue on, as will creative director Donatella Versace.

“This is a very exciting moment for Versace,” she said in a statement, adding that her brother Santo and daughter Allegra's stake in Capri "demonstrates our belief in the long-term success of Versace and commitment to this new global fashion luxury group."

“I am proud that Versace remains very strong in both fashion and modern culture. Versace is not only synonymous with its iconic and unmistakable style, but with being inclusive and embracing of diversity, as well as empowering people to express themselves," she said. "Santo, Allegra and I recognise that this next step will allow Versace to reach its full potential."

This will position the accessible the conglomerate, which acquired high-end shoemaker Jimmy Choo in July 2017 for $1.2 billion, to take a bigger slice of the high-end luxury market.

Versace is a world-famous name part of popular culture, but has been struggling to grow its business of similar scale for years. With the brand running losses from the late 1990s to 2011, the family sold a 20 percent stake to Blackstone in 2014 — a deal that valued the fashion house at $1.4 billion.


Adidas to Close Stores

Adidas expects to close down stores as part of a shift towards selling more goods online.

In an interview with the Financial Times, Kasper Rorsted said "over time, we will have fewer stores but they will be better," adding that over the coming year the number of Adidas stores was expected to contract slightly.

"Our website is the most important store we have in the world."

Adidas, which wants to double its e-commerce sales to €4 billion ($4.91 billion) by 2020 from the €1.6 billion it hit last year, with 2,500 stores globally and 13,000 additional mono-branded franchise stores, the Financial Times have said.

Burberry make some changes at the top

Burberry has named Riccardo Tisci as its new chief creative officer, he succeeds Christopher Bailey, who stepped down after 17 years from the creative helm. Having spent more than a decade at Givenchy as a creative director, Riccardo left the brand once his contract expired in January 2018. Givenchy is credited with being one of LVMH's most successful luxury brands.

"I have an enormous respect for Burberry's British heritage and global appeal and I am excited about the potential of this exceptional brand,” added Tisci. “I am honoured and delighted to be joining Burberry and reuniting with Marco Gobbetti ( Burberry’s chief executive ).”

Riccardo will direct all of Burberry’s collections from his new London base, and is expected to present his first for the brand in September.

Huda Beauty attracts TSG Investment

In mid December, TSG Consumer Partners (“TSG”), a leading private equity firm focused exclusively on the branded consumer sector, and Huda Beauty, one of the world's fastest-growing beauty brands, announced that TSG has acquired a stake in Huda Beauty. Ofcourse, the financial terms of the transaction were not disclosed. TSG see Huda Beauty's industry leading digital reach, their amazing global influence and ofcourse best-in-class product offerings as a grounds for joining forces and help lead the brand into the future.

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