The Australian arm of global fashion retailer Zara has reported a 25 per cent slip in its total profit for the financial year ending January 31, 2026, driven by a notable increase in business costs and offset by a decent lift in sales.
This is according to the latest ASIC filings from Inditex Australia Pty Ltd – the entity behind Zara Australia.
According to the income statement, Zara’s total profit for the last financial year slipped to $19.14 million, down from $25.5 million in FY25 to January 31, 2025.
The slip in total profit was driven by a 4.2 per cent lift in selling and administration costs to $191.68 million, which led to a 19 per cent slip in Zara Australia’s operating profit to $33.2 million.
At the top line, revenue grew by around 2.3 per cent to $410.3 million, but cost of sales grew faster by 5.3 per cent. This left gross profit essentially flat at $224.89 million, with gross margin slipping by 1.28 percentage points to 54.81 per cent.
Despite the total income slip, the company decided to issue a dividend of $34 million, which is three times higher than the previous financial year when they issued a $10 million payout. It is also larger than its net profit for FY26. That pulled retained earnings down from $53.7 million to $38.8 million, and total equity from $95.6 million to $80.7 million.
The dividend appears to have been paid back to the overall company – that being Zara Holding B.V.
Inditex Australia's accounts also include a $5.05 million provision relating to a review of award entitlements for store-based staff covering August 2012 to June 2024, after a third-party specialist identified shortfalls in employee payments.
It's not the first time Zara's Australian arm has disclosed staff pay issues – Ragtrader reported in 2021 that the retailer had identified $2.6 million in staff underpayments following a specialist review of in-store staff pay.
The scope and status of that earlier remediation relative to the current $5.05 million provision is unclear from the FY26 filing. However, the filing does note that any shortfall calculated up until July 18, 2025, plus any relevant interest and superannuation from the third-party reviews, has been remediated or an amount provided for by the directors.
Meanwhile, Zara Australia's lease liabilities were $137.5 million as at January 31, 2026, which is down slightly from $141.1 million in FY25. The company recognised $29.7 million in new lease additions during the year, alongside $2.3 million in disposals.
According to Zara’s Australian website, the retailer currently has 15 stores across Australia, including six in New South Wales, three in Queensland and three in Victoria.