Monday, March 31, 2008

Inditex Announces New Brand, Global Expansion

Grupo Inditex (Euronext MC: ITX), the maker of Zara, has just announced a slew of things at an analyst conference today, including plans to launch an accessories brand to be called Uterqüe. The brand is to sell bags, shoes, sunglasses and scarves, and the company is planning on having 20 to 30 of the shops open by year-end.

Also of note was the news that Zara stores will be opening up at a faster clip throughout Asia (Inditex already has some stores in Japan and China). Seoul's first Zara location will open in April, with at least four more openings planned in the city before year-end. These openings come as the company is busy rolling out heaps of new stores in Italy, France, Russia, and eastern Europe.

So, when is Inditex going to start seeing problems from over-saturation? Or is Inditex immune because they have so many brands?

It would serve Inditex's management to take a good look at what happened to Ford and General Motors. In the 80's and 90's, both sported portfolios of profitable brands whose products became more and more alike. Those brands began poaching sales from one-another, and in the end, GM axed their underperforming Oldsmobile marque. Both companies soldiered on with portfolios of less-than-original nameplates and continue to lose market share to their more concentrated Japanese/German rivals to this day.

Inditex has got to continue to ensure that their brands are distinct from one-another in order to safeguard their relevance in the marketplace.

Inditex abrirá entre 20 y 30 tiendas de complementos en el segundo semestre de 2008


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