Zara profits fall by a third as it invests in stores and supply chain

The Inditex-owned fashion retailer generated pre-tax profit of £33.9m in the year to January 31, down from £51.6m the prior year.

But according to documents filed at Companies House, sales increased 3.4% to £457.8m.

Zara said selling and distribution costs increased 7.2% against the previous year because of the refurbishment of three London flagship stores – Brompton Road, Oxford Street East and Manchester - while it also refitted 10 smaller stores.

Zara also had to use an external warehouse in the year as a result of “stockroom capacity issues” in Greater London to cope with sales growth across the newly revamped stores and to tackle stock replenishment.

Zara said it opened one new store in the period in London Gatwick’s South Terminal.

It added: “The company still plans to invest in new locations as soon as suitable opportunities arise.”