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【摘要】 本文對英国ZAZR服装有限公司进行了投资可行性分析，通过对其过去五年的盈利记录和市场地位进行分析，对其财务业绩进行评估，综合讨论英国ZAZR公司是否具有投资价值，其今后发展前景如何。
【关键词】 地方 金融管理 规范
Introduction
In 1975, a small store named Zara opened by Amancio Ortega Gaona. Not long after, its business grew rapidly and it has so far become an international company named Inditex which is made up of more than 100 subsidiaries operating in textile design, manufacturing and distribution. (Inditex, n.d.) Now, it is the third-biggest clothing company around the world and the top one in Spain (Inditex, 2010a). At the end of 2009, the sales of Inditex reached 11.1 billion euro and the net income grew to 1.3 billion euro. (Inditex, 2010b) Until July 2010, Inditex has over 4681 stores in 77 countries (Inditex, 2010a) and nine clothing retail brand which are Zara, Pull and Bear, Massimo Dutti, Berahka, Stradibarius, Oysho, Zara Home and Kiddy's Class. Zara is the most famous one among these nine subsidiaries. (Inditex, 2010b) Zara UK Limited is a part of the inditex Group which is registered business address in London and engaged in retail sale of clothing. (FAME Database, 2010) Its competitors include River Islands, H&M, New look, Next, Topshop and so on and it has absolute advantages. As the flagship brand of Inditex and one of the leaders in fashion, the net sales of Zara UK reached 310,620 thousands GBP in the financial year 2009 and increased by 13% than the prior year. (FAME Database, 2010)
This report would like to provide a comprehensive analysis of ZARA U.K. Limited through the discussion of two aspects.
Part 1: Financial History and Market Position
According to the financial history of last ten years, Zara UK has a remarkable and multivariate growth with the rapid development of the whole company. Its turnover shows a Steady and consistent growth although it may mislead and hide some potential problems. The gross profit has a similar trend with the turnover. However, the most significant increase was in 2006 by 31% and the slowest increase was in 2008 only by 2%. Moreover, the Profit Margin fluctuates between 8% and -8% and reached 2% at the end of 2009. The net profit changed dramatically and there was sharply increase in 2009. These data illustrate that Zara are becoming more and more mature as well as successful through last ten years. Additionally, now Zara UK consisted of 65 stores and it will continue to invest at least two more stores this year in Swansea and Aberdeen. (FAME Database, 2010) However, at the same time, it means that the operating expenses will be increased and actually it was already increased by 0.6% compared to the last year. (FAME Database, 2010) Therefore, there is an interesting question can be discussed. With the significant decrease of the net profit in 2008, does Zara really need to expend its business during the economic crisis and the strategic decision taken by the manager is successful or not? To be honest, we have to accept that Zara has a significant improvement during the past years. The most important problems to Zara UK are that the economic crisis affected the whole world including clothing industry and people are not so crazy with fashion. They want to buy more practical and substantial things. Zara used to forces on the lasted fashion but not the quality. (Nebahat, 2008) Additionally, because that Zara purchases goods in Euros, US and HK dollars from its suppliers, so it is easy to be influenced by the fluctuation of the exchange rate and in turn to affect costing. (FAME Database, 2010) Therefore, Zara has taken a relentless battering recently. However, after a series of affective adjustments and policies in 2009, Zara becoming more mature and it can satisfy the need of the market as well as customers again. It focuses on "sales growth for current store portfolio, while keeping operating expenses under tight control, in order to increase operating margins as a result". (FAME Database, 2010) At the same time, the directors' report and financial statement of Zara UK for the year ended 31 January 2010 point out that "total sales for the company were 3106m GBP (2009 2751m GBP), an increase of 13% compared to the prior year, primarily due to the opening of new stores of the increase in sales, 50% was generated by new stores." (FAME Database, 2010) We cannot evaluate the perdurability of these adjustments and policies because that the date of Zara UK in 2010 haven't be published yet. However, it will be an admirable result inevitably. (Inditex, 2010a)
Part 2: Assessment of financial performance
The Return on Capital Employed (ROCE) can explain the relationship between the capital invested and profit. It can be an index that manifesting the ability of using the capital. Thus, a successful company must make sure that this percentage continues to be high. (Atrill and McLaney, 2006) Moreover, this report will compare the indexes among the competitor in the clothing industry to make a benchmark and assess the financial performance of Zara UK. Zara wasn't good at this aspect. It's always the last one in last five years and beaten by its competitors. Additionally, it is unbelievable that the figures were negative numbers in 2005 and in 2008. Thus, it is easy to see that although Zara has a sharply increase of ROCE from 2008 to 2009; it is not a highly profitable company among its competitors.
Additionally, the Return on Shareholder Funds (ROSF) is a measure of profitability. It can indicate that if a company is profitable for shareholders or not. It can exposure the essence of the investment and give a deeper discernment of the profitability. (Atrill and McLaney, 2006) Similarly, the ROSF of Zara UK had a same trend with ROCE. Its competitors always beat it. Although there was a remarkable increase between 2008 and 2009, it was still much lower than the others were. Thus, Zara UK is not a highly profitable company for shareholders. Furthermore, another important element for clothing retailers is Stock Turnover. It is a comprehensive index that measuring and appraises enterprising the links between the departments and situation of the management. As clothing retailers, they must provide the lasted fashion products and at the same time, they must sale old products as much as possible to keep the profit. The Appendix G shows that Zara UK has a higher Stock Turnover that is only lower than Next. It means that Zara's inventory level is lower and its fluidity is stronger than most of its competitors. In addition, its inventory can be converted into cash and receivables faster.
In fact, Net Profit Margin is one of the most important indexes, which can reflect the profitability of company. Zara is actually performing much lower than its competitors are. There even have negatives in the year of 2005 and 2008. It may because of the pricing strategy of Zara UK. In another word, Zara UK is experiencing a price war that could lead a lower profit. (Tokatli, 2007)
Conclusion
According to the analysis of the financial
history for last five years, it is obvious that Zara is not a highly profitable company for investors. The whole clothing industry is recessionary. However, the figures, such as net sales and net profit, proved that Zara UK has huge potential power for continuing growth in a profitable way over the following period.
References list
[1]Atrill, P and McLaney, E 2006. Accounting and Finance for Non-Specialists. Available at :< URL: http://lib.myilibrary.com.ezproxy.liv.ac.uk/Open.aspx?id=60207&src=2>[Accessed 10 November 2010].
[2]A Verity Partners LLC, 2003. Respond-
ing to new challenges in the branded apparel Industry. [online] A Verity Partners LLC. Available at: < http://www.veritypartnersllc.com/files
/phatfile/Verity%20Branded%20Apparel%
20whitepaper%20final.pdf?&MMN_position=
31:31> [Accessed 18 November 2010].
（作者單位：青岛大学）
【关键词】 地方 金融管理 规范
Introduction
In 1975, a small store named Zara opened by Amancio Ortega Gaona. Not long after, its business grew rapidly and it has so far become an international company named Inditex which is made up of more than 100 subsidiaries operating in textile design, manufacturing and distribution. (Inditex, n.d.) Now, it is the third-biggest clothing company around the world and the top one in Spain (Inditex, 2010a). At the end of 2009, the sales of Inditex reached 11.1 billion euro and the net income grew to 1.3 billion euro. (Inditex, 2010b) Until July 2010, Inditex has over 4681 stores in 77 countries (Inditex, 2010a) and nine clothing retail brand which are Zara, Pull and Bear, Massimo Dutti, Berahka, Stradibarius, Oysho, Zara Home and Kiddy's Class. Zara is the most famous one among these nine subsidiaries. (Inditex, 2010b) Zara UK Limited is a part of the inditex Group which is registered business address in London and engaged in retail sale of clothing. (FAME Database, 2010) Its competitors include River Islands, H&M, New look, Next, Topshop and so on and it has absolute advantages. As the flagship brand of Inditex and one of the leaders in fashion, the net sales of Zara UK reached 310,620 thousands GBP in the financial year 2009 and increased by 13% than the prior year. (FAME Database, 2010)
This report would like to provide a comprehensive analysis of ZARA U.K. Limited through the discussion of two aspects.
Part 1: Financial History and Market Position
According to the financial history of last ten years, Zara UK has a remarkable and multivariate growth with the rapid development of the whole company. Its turnover shows a Steady and consistent growth although it may mislead and hide some potential problems. The gross profit has a similar trend with the turnover. However, the most significant increase was in 2006 by 31% and the slowest increase was in 2008 only by 2%. Moreover, the Profit Margin fluctuates between 8% and -8% and reached 2% at the end of 2009. The net profit changed dramatically and there was sharply increase in 2009. These data illustrate that Zara are becoming more and more mature as well as successful through last ten years. Additionally, now Zara UK consisted of 65 stores and it will continue to invest at least two more stores this year in Swansea and Aberdeen. (FAME Database, 2010) However, at the same time, it means that the operating expenses will be increased and actually it was already increased by 0.6% compared to the last year. (FAME Database, 2010) Therefore, there is an interesting question can be discussed. With the significant decrease of the net profit in 2008, does Zara really need to expend its business during the economic crisis and the strategic decision taken by the manager is successful or not? To be honest, we have to accept that Zara has a significant improvement during the past years. The most important problems to Zara UK are that the economic crisis affected the whole world including clothing industry and people are not so crazy with fashion. They want to buy more practical and substantial things. Zara used to forces on the lasted fashion but not the quality. (Nebahat, 2008) Additionally, because that Zara purchases goods in Euros, US and HK dollars from its suppliers, so it is easy to be influenced by the fluctuation of the exchange rate and in turn to affect costing. (FAME Database, 2010) Therefore, Zara has taken a relentless battering recently. However, after a series of affective adjustments and policies in 2009, Zara becoming more mature and it can satisfy the need of the market as well as customers again. It focuses on "sales growth for current store portfolio, while keeping operating expenses under tight control, in order to increase operating margins as a result". (FAME Database, 2010) At the same time, the directors' report and financial statement of Zara UK for the year ended 31 January 2010 point out that "total sales for the company were 3106m GBP (2009 2751m GBP), an increase of 13% compared to the prior year, primarily due to the opening of new stores of the increase in sales, 50% was generated by new stores." (FAME Database, 2010) We cannot evaluate the perdurability of these adjustments and policies because that the date of Zara UK in 2010 haven't be published yet. However, it will be an admirable result inevitably. (Inditex, 2010a)
Part 2: Assessment of financial performance
The Return on Capital Employed (ROCE) can explain the relationship between the capital invested and profit. It can be an index that manifesting the ability of using the capital. Thus, a successful company must make sure that this percentage continues to be high. (Atrill and McLaney, 2006) Moreover, this report will compare the indexes among the competitor in the clothing industry to make a benchmark and assess the financial performance of Zara UK. Zara wasn't good at this aspect. It's always the last one in last five years and beaten by its competitors. Additionally, it is unbelievable that the figures were negative numbers in 2005 and in 2008. Thus, it is easy to see that although Zara has a sharply increase of ROCE from 2008 to 2009; it is not a highly profitable company among its competitors.
Additionally, the Return on Shareholder Funds (ROSF) is a measure of profitability. It can indicate that if a company is profitable for shareholders or not. It can exposure the essence of the investment and give a deeper discernment of the profitability. (Atrill and McLaney, 2006) Similarly, the ROSF of Zara UK had a same trend with ROCE. Its competitors always beat it. Although there was a remarkable increase between 2008 and 2009, it was still much lower than the others were. Thus, Zara UK is not a highly profitable company for shareholders. Furthermore, another important element for clothing retailers is Stock Turnover. It is a comprehensive index that measuring and appraises enterprising the links between the departments and situation of the management. As clothing retailers, they must provide the lasted fashion products and at the same time, they must sale old products as much as possible to keep the profit. The Appendix G shows that Zara UK has a higher Stock Turnover that is only lower than Next. It means that Zara's inventory level is lower and its fluidity is stronger than most of its competitors. In addition, its inventory can be converted into cash and receivables faster.
In fact, Net Profit Margin is one of the most important indexes, which can reflect the profitability of company. Zara is actually performing much lower than its competitors are. There even have negatives in the year of 2005 and 2008. It may because of the pricing strategy of Zara UK. In another word, Zara UK is experiencing a price war that could lead a lower profit. (Tokatli, 2007)
Conclusion
According to the analysis of the financial
history for last five years, it is obvious that Zara is not a highly profitable company for investors. The whole clothing industry is recessionary. However, the figures, such as net sales and net profit, proved that Zara UK has huge potential power for continuing growth in a profitable way over the following period.
References list
[1]Atrill, P and McLaney, E 2006. Accounting and Finance for Non-Specialists. Available at :< URL: http://lib.myilibrary.com.ezproxy.liv.ac.uk/Open.aspx?id=60207&src=2>[Accessed 10 November 2010].
[2]A Verity Partners LLC, 2003. Respond-
ing to new challenges in the branded apparel Industry. [online] A Verity Partners LLC. Available at: < http://www.veritypartnersllc.com/files
/phatfile/Verity%20Branded%20Apparel%
20whitepaper%20final.pdf?&MMN_position=
31:31> [Accessed 18 November 2010].
（作者單位：青岛大学）