FAST FASHION RETAILER Zara’s parent company has reported a record net profit for 2022 of €4.1 billion.
Inditex, the world’s largest fashion retailer, operates subsidiaries including Zara, Bershka, Stradivarius, Pull & Bear and Massimo Dutti. The company reported record profits for last year up 27% from 2021, while sales rose 17% to €32.6 billion.
Inditex CEO Oscar Garcia Maceiras said that the “excellent results of 2022 show the strength of our business model”.
However, it is an industry under increasing scrutiny for its role in promoting huge amounts of clothing production, transport, and waste that create large quantities of greenhouse gas emissions, as well for a poor record on workers’ rights abuses.
A study published in January by Aberdeen University and advocacy group Transform Trade surveyed 1,000 Bangladeshi factories that made garments for global brands and retailers during the Covid-19 pandemic.
It identified “unfair trading practices” such as order cancellations, refusals or delays in payments, and price reductions that resulted in lower wages, loss of jobs and high staff turnover. One-fifth of the factories said they struggled to pay Bangladesh’s legal minimum wage as a result.
The researchers heard from respondents that the “highest proportion” of unfair practices came from major brands such as H&M, Inditex, Next, and Primark.
The fashion industry is responsible for up to 10% of annual CO2 emissions and uses 93 billion cubic metres of water each year, around the same amount of drinking water that would be used by five million people.
Around 110,000 tonnes of textile waste is discarded in Ireland every year, according to the Environmental Protection Agency.
57,000 tonnes of that is collected through commercial textile banks and collections and donations to charity shops, while 64,000 is from households.
Of that 64,000 tonnes of households’ textile waste, the majority – 42,000 tonnes – is consists of clothing.
In 2019, Greenpeace argued that the fast fashion industry needed an “urgent makeover”, citing that “relentless insistence on novelty has created a constantly running conveyor belt producing items intended to be discarded after one or two uses, with the vast majority ending up in landfills or an incinerator”.
H&M, another fast fashion giant, saw its profits drop in 2022, which it attributed to pulling out of Russia amid the sanctions imposed on the country after it invaded Ukraine.
Its net profit dropped by 68%, though it still recorded a figure of $349 million.
Chief executive Helena Helmersson said that the “decision to wind down the business in Russia, which was an important and profitable market, has had a significant negative impact on our results”.
“The hikes in raw materials and freight costs combined with a historically strong US dollar resulted in extensive cost increases for purchases of goods,” Helmersson said.
Inditex similarly closed 514 stores in Russia last year, which was its second biggest market after Spain, selling the shops to Emirati group Daher.
Meanwhile, outdoor fashion brand Patagonia made waves last year when it announced a major move to direct profits into tackling climate change, adopting a message that “earth is now our only shareholder”.
In an open letter announcing the change of the company’s ownership to a non-profit organisation, its founder Yvon Chouinard said that “each year, the money we make after reinvesting in the business will be distributed as a dividend to help fight the crisis”.
Chouinard said he “never wanted to be a businessman” and that when he began to “witness the extent of ecological destruction, Patagonia committed to using our company to change the way business was done”.
Additional reporting by AFP
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