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During three years in Vietnam, Zara has reported revenues of nearly VND3.1 trillion (US$129 million) with an average annual gross profit margin of about 40%, VnExpress reported.
Zara is among the most successful global fast fashion retail brands proving their appeals to Vietnamese customers as the revenues of those brands in the country outdistanced some domestic fashion chains including Blue Exchange, Ivy Moda or Kowil.
According to Zara Vietnam financial reports, its revenues from just two stores in Hanoi and Ho Chi Minh City topped VND1.7 trillion (US$73.2 million) in 2018, much higher than those of domestic luxury fashion retailers such as Tam Son Fashion or Mai Son International Retail.
Indonesian retail operator Mitra Adiperkasa set up the first Zara retail store in Vietnam in 2016 and continued to open three other stores in the country to sell Zara’s other sister brands such as Massimo Dutti, Pull & Bear and Stradivarius.
Statistics from 2018 showed the revenues generated from Vietnam of all brands of Inditex Group (Zara, Massimo Dutti, Pull & Bear and Stradivarius) were about VND1.97 billion (US$84.8 million), doubled that of 2017 and increased four-fold compared to the figure in Thailand.
In fact, the revenue from Zara (Inditex’ spearhead) made up 90% of total turnover of five brands operating in Vietnam.
The rapid growth of Zara revealed the shopping trend Vietnamese recently.
A Nielsen survey in 2018 showed that Vietnam ranked third in the world in the number of people fond of luxury goods, just after China and India.
Meanwhile, Statistics Portal, a German market research company, forecast the annual growth rate of the Vietnamese fashion industry in the 2017-2022 period to be 22.5% and the revenue from this segment in 2022 is predicted to reach nearly US$1 billion.
Despite amazingly growing revenue, the profit before taxes (PBT) of Zara in Vietnam still remains low at just several million US dollars as the brands spent huge expense on selling activities to lure more consumers.
In 2018, Zara Vietnam’s PBT was VND98 billion (US$4.2 million), equaled to about 6% of the revenue mainly due to high selling expense, which accounted for 70% of the gross profit over the past two years.