Inditex, the largest Spanish listed company, will announce next Wednesday an annual net profit of more than 4,000 million euros, far exceeding its pre-pandemic figures, despite the fact that in its fiscal year 2022 it left Russia and thus renounced what was its second market by number of shops.
The owner of Zara and Massimo Dutti, among other brands, will release on the 15th the accounts of its last fiscal year, which started in February 2022, when the Russian invasion of Ukraine began, which led the textile group founded by Amancio Ortega – the richest man in Spain – to close its more than 500 shops in Russia.
There it had more than 9,000 employees and earned about 8.5 % of its operating profit. In 2021, the US became the group’s second largest market after Spain.
15% HIGHER THAN ITS PRE-PANDEMIC RECORD
After having already presented historically high figures in the first nine months of its fiscal year (with a net result of 3,095 million that was 24% higher than a year earlier), the analysts’ consensus gathered by Bloomberg suggests that the company could have closed the 2022 fiscal year with a net profit of 4,180 million.
If so, this would be 28.9% more than the 3,243 million earned the previous year and 14.8% more than in 2019, when the group sealed its best year ever with 3,639 million (which was then followed by the covid slump).
Renta4 forecasts that its profit will increase by 11% compared to the pre-covid level and by 23% compared to 2021, to reach 4,040 million, while it predicts that sales will be around 32,495 million, which would also be a record figure, after exceeding those of 2019 by 15% and those of 2021 by 17.2%.
For its part, Sabadell puts its profit forecast for the textile group – also owner of brands such as Pull&Bear, Bershka, Stradivarius and Oysho – at 4,216 million, 30% more than in 2021 and 16% more than in 2019. It also believes that it will have a turnover of 32,539 million, 17% more than in 2021 and 15% more than in 2019.
As for the gross margin, which measures the difference between the profit from selling a product and what it costs to produce it, Renta4 believes it will stand at 56.9% of sales in 2022 (a year of high inflation on an international scale), between 55.9% in 2019 and 57.1% in 2021.
2023: COST INFLATION AND WAGE INCREASES
On Wednesday, we will also have to keep an eye on the progress that the company can give on the evolution of sales at the start of this year and the forecast that it can make of its gross margin, taking into account the current context of high inflation and the agreement reached in Spain to raise the salaries of its employees.
Last month Inditex agreed with the unions on an average wage increase for 80% of shop employees across all its brands of between 20% and 25%, according to union estimates.
It could also give some indication of whether it intends to raise prices and by how much. During the 2022 financial year it raised them by around “half a single digit”, while it has tried to maintain “rigorous” control of operating expenses so that they grow less than sales.
THE FIRST PRESENTATION WITHOUT PABLO ISLA
This will be the first annual results presentation of the group – which has more than 165,000 employees worldwide – to be given by Oscar García Maceiras, who took over as CEO of Inditex in November 2021, replacing Carlos Crespo, who has held the post since July 2021.
Furthermore, it will be the first time that Marta Ortega, the youngest daughter of Amancio Ortega, will hold the non-executive chairmanship of the group, which she assumed on 1 April 2022, almost a year ago, thus culminating the process of orderly succession that the corporation designed at the time and which led her to hold different positions in the group for fifteen years.
Thus, Pablo Isla, who until April last year was the Chairman of Inditex, will no longer be present at the presentation of the results. The former head of the world’s largest fashion distribution group announced a few months later, in August, the founding of the audiovisual production company Fonte Films.