Zara’s pre-tax profits hew down by one-third to £39.2m in the year to 31 January.
Photograph: Micha Theiner/Burgh AM/Rex Features

Zara’s UK profits drop sharply notwithstanding record sales

Fashion chain blames fall on investment programme involving hoard refurbishments and moving its London head office

Zara has distanced a sharp fall in UK profits despite sales breaking in every way the £600m barrier for the first time.

Pre-tax profits at the British subsidiary of the Spanish form group Inditex, which owns the Zara brand, dabbed by one-third to £39.2m in the year to 31 January, down from £58.3m in 2016. Sales flood by 13% to £602.7m.

Zara pointed to an 11% jump in payments due to an investment programme that included store refurbishments and unfixed its London head office to a different Mayfair address. The presence also closed stores at Oxford Circus in central London and at Gatwick.

As a development of the upheaval, Zara said it paid its parent company dividends totalling £30.5m, down from £47m in 2016.

The shortened payout did not hurt the wallet of the Inditex founder, Amancio Ortega, one of the incredible’s richest men with a fortune of $79.6bn (£60bn), according to Forbes. In Parade, Inditex, which is listed on the stock market in Spain, conjectured Ortega would receive a €1.26bn payout after the accumulation reported record sales of €23bn and net profit up by 10% at €3.2bn.

Ortega, 81, opened the blue ribbon Zara in the Galician city of La Coruña in 1975. Over the since four decades, the company has become the world’s biggest clothing retailer, with various than 7,400 stores and a stable of brands that catalogues Zara Home, Massimo Dutti and Pull & Bear.

Although Zara, which make ited in the UK in the late 1990s, is feted by the fashion pack, it only only makes the UK’s top 20 list of womenswear retailers based on bazaar share. The research company GlobalData ranks Zara 19th with a exchange share of 1.5%, compared with the market leader, Characterizes & Spencer, on 9%. Next and Primark are number two and three individually.

Zara also refurbished some of its London shops to “block the stores’ layout and atmosphere in line with the Zara marque image”.