Inditex, owner of Zara, Massimo Dutti or Bershka, has broken record sales and profits in its first fiscal quarter, from February 1 to March 30, despite the inflation that plagues the main world economies and the Russian invasion of Ukraine . The price increase that Inditex has applied to its products -2% in Spain, in a selection of garments- to deal with the rise in raw materials does not seem to have affected sales.
Revenues reached 6,742 million euros compared to 5,927 million in the same period of 2019, thanks to the “strong recovery” of customer traffic in stores in most of its markets due to the fall in restrictions. Net profit was 760 million euros (734 million in 2019). The profits, Inditex points out, would have been even higher, 940 million, if the group had not decided to provision 216 million for the closure of stores in Ukraine and Russia due to the war and the consequent sanctions.
These are the first results that the company presents after the change in its leadership. Marta Ortega, daughter of Amancio Ortega, thus debuts with record figures in the non-executive presidency, with Óscar García Maceiras as CEO after the departure of Pablo Isla on April 1.
Inditex has highlighted that growth was “robust” in all geographical areas, with the exception of those markets, such as Ukraine and Russia, where the group’s stores and online platform have been temporarily closed since February 24 and March 5, respectively, or China, where 67 stores have been subject to closures related to Covid-19. The United States continues to grow “remarkably” and consolidates itself as the group’s second largest market.
Likewise, according to the firm, online sales “continue to show their strength”, although they are 6% below the same period last year, when many countries had trade restrictions in force to contain the covid pandemic and online shopping was, therefore, one of the main sales channels. Its goal is for e-commerce to contribute 30% of turnover in 2024.
The CEO of Inditex, Óscar García Maceiras, has pointed out that these results are the result “of a differentiated model at full capacity”. “The strength and adaptability of the business model, and the solid performance of our creative, commercial and operational teams deepens the differentiation of our proposal, with a strong focus on innovation, digitization and sustainability”, he added.
The gross margin on sales reached 60.1%, the highest in the last ten years, with an operating expense that grew by 24%, below the growth in sales. Specifically, the gross margin grew by 37%, to 4,054 million euros.
The gross operating result (Ebitda), for its part, grew by 55%, to 1,917 million euros, while the net operating result (Ebit) grew by 82%, to 1,034 million euros.
Likewise, the inventory at closing grew by 27%, according to the firm, which has decided to anticipate its entries without modifying its level of commitment to increase product availability in the face of possible tensions in the supply chain.
Regarding the start of the second quarter, the spring-summer collections have also received, according to the firm, an “excellent” reception from customers. Thus, in the period between May 1 and June 5 of this year, sales at a constant exchange rate grew by 17% (13% in the last two weeks of that period). Currently 90% of stores are open.
“Strategic initiatives to strengthen our fully integrated store and online business model globally are accelerating. Sustainability and digitization are a key part of our strategy,” the firm stressed. Thus, Inditex will continue to develop these long-term priorities to maximize organic growth, with an investment for this year of around 1,100 million euros.
On the other hand, the shareholders’ meeting will be held on July 12 and in it the board of directors will propose a total dividend corresponding to the 2022 financial year of 0.93 euros per share, of which 0.465 euros have been paid on July 2. May and the rest will be disbursed on November 2. In March, the board of directors also proposed an extraordinary dividend of 0.40 euros per share to be paid in relation to the 2022 financial year.
