Zara’s garments are sought after by shoppers across the globe—that’s helped push its sales up to an all-time high in 2023.
However, some of its customers will have to brace for delays in their orders as the world’s biggest retailer grapples with rerouting its ships due to the Red Sea crisis.
Inditex, the parent company that owns Zara, Bershka and Stradivarius, said it’s facing a week’s delay on average as it reroutes its ships to avoid the dangerous Suez Canal path, which has been under attack by Houthi rebels.
“Shipping costs may have risen as a result of higher fuel consumption and the extraordinary cost overruns,” Inditex said in its annual report on Thursday.
“Our operations have not been significantly impacted by this situation so far.”
Since the Israel-Hamas war began, Houthi rebels from Yemen have persistently targeted vessels crossing the critical Red Sea passage which handled roughly 10% of global trade by volume. Several retailers have had to reroute their shipments through South Africa’s Cape of Good Hope instead, hoping to keep them safe—even if that means a few extra days till customers get their hands on the latest in fashion.
Other consumer brands, like Ikea, have also flagged disruptions to their supply chain and added costs as a result of the rerouting. As the Houthi rebels’ attacks press on, the volume of shipping vessels transiting through the Suez Canal has now dropped by 50% year-over-year, the International Monetary Fund estimated last week.
Inditex didn’t return Fortune’s request for comment.
Consumers chasing Zara’s clothing
Red Sea disruptions aside, Zara-owner Inditex has had a blockbuster 12 months to Jan. 31, 2024.
The Spanish company reported a 10.4% increase in sales to €36 billion ($39.2 billion), while Inditex’s net income jumped 30.3% compared to 2022 levels. Its revenue growth surpassed that of its Swedish rival H&M, as it managed to stay up-to-date with fashion trends and manage inflation by selling clothes at higher price points, Reuters reported.
“Inditex’s performance in 2023 has been excellent,” Inditex CEO Oscar García Maceiras said in a statement. Zara, as well as its home decor arm Zara Home, were the main contributors to Inditex’s strong performance.
The company opened stores across 41 different markets last year, and now has close to 5,700 stores worldwide.
News on the company’s earnings sent its shares to an all-time high on Wednesday.
As for 2024, inflation and supply chain snarls could continue being in the backdrop, but Inditex is already seeing a boost in shopping. The company said in its annual report that its sales have climbed 11% between Feb. 1 and Mar. 11 compared to the same period (minus the extra leap year day) last year.
