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Zara India Faces a Slowdown

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Could the buzz about Zara be fizzling out in India? Inditex Trent, the joint venture between Inditex and the Tata Group, reported a 35 percent decrease in profit for the year ended March 2014. Profits dropped to $290 million from a record $450 million in fiscal year 2013. And according to the Economic Times, the 13-door business also saw its slowest sales growth ever, at 41 percent year-on-year.

Mukesh Kumar, vice president at Infiniti Malls, told the Economic Times, “Given the brand conscious and aspirational nature of consumers, there might be an impact initially once newer brands enter. However, once the novelty factor fades away, each of these brand will grow since the market hasn’t reached its true potential.”

From 2013 to 2014, Zara opened five new stores in India, however, more than half of its sales continue to come from high performing stores at Phoenix High Street in Mumbai and Select Citywalk in Delhi.

The Economic Times noted that while Zara’s sales growth has slowed, it could fare better than its international counterparts like Marks & Spencer and Levi’s, which as of publication date, have yet to file their annual numbers to the Registrar of Companies. It could see its biggest competition from Gap, Uniqlo and H&M, which are set to open stores in India.

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