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Financial Statements Analysis
Case Study


1. Introduction: economic and sector situation analysis
2. History of INDITEX
3. Strategy of INDITEX
4. Economic and Financial Analysis
a) Balance Sheet and Income Statement of INDITEX
b) Balance Sheet and Income Statement of H&M
c) Main ratios for INDITEX and H&M
D)Interpretation of financial statements, situation of INDITEX,
Comparison of INDITEX vs. H&M
E) Conclusions
5. Provisional and forecast for 2009 and 2010
6. Annex and sources
1. Introduction: economic and sector situation analysis
The textile industry is acting in a business of basic commodities. Being not substitutable it ensures a high demand around the globe.Especially here, in Europe, we can find leading fashion brands. Typically for the zone, like in the United States, firms are operating mainly in design and retailing, while production is often outsourced from Asian countries.
The current economic crisis also has an impact on the sector and hits therefore especially hard factories, e.g. in India, for which garment production is one of thelargest employment fields. They are the first to feel the decline in sales.
Most recently the emerge of a new form of selling, e-retailing, which in times of financial downturn is making high profits, is causing changes in the industry.
The market for clothing faces strong segmentation. According to quality and price of products, brands focus their strategy on different customers. On onehand we have Haute Couture labels like Chanel or Giorgio Armani and on the other hand low-cost brands such as Primark or others so called “white brands” or private brands.

2. History of INDITEX
Inditex Group is a conglomerate of companies, mainly textile enterprises, but also from other sectors. Nowadays, Inditex is one of the world's largest fashion retailers and owns eight differentstore formats: Zara, Pull & Bear, Massimo Dutti, Bershka, Stradivarius, Oysho, Zara Home and Uterqüe boasting 4.705 stores in 76 countries. The Inditex Group is made up of more than 100 companies operating in textile design, manufacturing and distribution.
Amancio Ortega Gaona is the chairman and founder of Inditex, he begins his career as a clothing manufacturer. From 1963 to 1974, the businessgrows steadily until Ortega owns several factories, which distribute their merchandise to other European countries. The first Zara shop opened in 1975 in A Coruña, Spain, where the group first began doing business and which is still home to its headquarters. The group INDITEX was founded in 1985 as the holding company. Zara’s shop were well received by the public, and started to open new shops allother the countries and later on, Zara expanded internationally, in 1988 to Portugal and in the 1990 to the United States and France.

In 1991, Retailer Pull & Bear was founded, and Inditex bought 65% of the Massimo Dutti Group, and later in 1995, they finally acquired the 100% of the shares. In 1998, this year marks the launch of Bershka, a retailer aimed at young women and teen girls. Oneyear later, Inditex acquired Stradivarius, the Group's fifth retailer. The first Zara home outlet was introduced in 2003 and in 2007 they created it’s first on-line store.
During all those years, Inditex kept opening new stores at different locations all around the world and nowadays its stores can now be found in prime locations in more than 400 cities in Europe, the Americas, Asia and Africa. Inthe year 2008, INDITEX founded Uterqüe, a retailer specializing in accessories and other fashion extras. Finally last year, Inditex signs a joint venture with the Tata Group to open stores in India beginning in 2010 while a new distribution centre begins operating in Palafolls (Barcelona), next to the existing logistics platform in Tordera.

International expansions:
1988/ 1989/ 1990/ 1992/...