Inditex and H&M Financials

Arguably the most important retail trend of the last 10 years has been the emergence of fast fashion retailers.  Inditex (Zara), H&M and Forever 21 have seen explosive growth to the extent that Inditex's founder is now wealthier than Warren Buffett.

What's more amazing is that because Inditex and H&M aren't US listed companies and Forever 21 is private, most US investors haven't had a chance to participate in the trend.  Because of this there's been less focus on the behemoths that these companies have become here in the states.  Inditex has a larger market cap than Target, Macy's, Nordstrom and Gap combined.  Below are some comps to show how it gets there.  Needless to say the multiple is rather generous.

September Retail Sales

Retail Sales numbers released this morning were reasonably strong, up 1.1% for the month of September and 5.3% y/y.  Sales at general merchandise stores stood out as a weak point though.  General merchandise sales make up about 12.5% of the total and were down 1.1% year over year.

A summary of retail sales data and the categories that make up General Merchandise are below.  Census doesn't break out specific businesses that make up each NAICS category, but it's probable that Walmart, Target and Costco would be included in the category.

Amazon vs. Target

I've written a few times about what I think about Amazon's market potential, but the growth that is priced into the stock never ceases to amaze me.  Below is a comparison of some fundamental metrics for Amazon vs. Target.  Amazon does 75% of Target's revenue and only 58% of Target's gross profit, but it has a market cap that is 2.7x larger than Target's.  Amazon has to grow a lot to grow into that valuation.

TGT Revenue TTM data by YCharts

TGT Market Cap data by YCharts