Record profit for Inditex with a strong rise in margins
Inditex, the fashion company that encompasses brands such as Zara, Pull&Bear and Massimo Dutti, has extended its mid-year take-off by presenting a record earnings figure of 2,513 million euros in its first fiscal half-year (February to July), 40.1% more than in the same period then unpublished in 2022 (1,794 million), with an increase in its gross margins of 27 basis points compared to the first half of 2022.
The figures presented this Wednesday to the Spanish National Securities Market Commission (CNMV) have improved the records set by the company in 2022, with turnover rising 13.5% to 16,851 million (14,845 million in July 2022) and gross operating profit (ebitda) up 15.7% (4,663 million).
Its CEO, Óscar Maceiras, highlighted the performance of the business model, which in his opinion has taken the company to “a higher level”.
The executive explained this by “the permanent commitment to creativity, product quality and customer experience, as well as the decisive progress in sustainability”.
HIGHER MARGINS FOR INDITEX
The results of the textile multinational include the gross margin (difference between income and expenses), which increased by 14.1 % to 9,801 million, and stood at 58.2 % of sales (27 basis points more compared to the first half of 2022).
Inditex explains it by the “strong operating performance” since February and by the “normalisation in the conditions” of the supply chain.
In fact, the textile company reduced inventory by 6.9% at 31 July compared to the same date last year.
At the end of 2023, Inditex expects a stable gross margin of plus-minus 50 basis points, with net cash increased by 14.1% over the same period last year, to 10,546 million.
ZARA ACCELERATES
Sales increased in all geographic areas and in all formats. In Zara and Zara Home alone, net sales grew by 13.1% compared to the second half of 2022, to 12,362 million (the format with the highest sales).
Other brands also rebounded in the period, such as Oysho, which increased sales by 18.3% (346 million); Stradivarius, 17.7% (1,075 million); Massimo Dutti, 16.8% (842 million); Berskha, 12.3% (1,184 million), and Pull&Bear, 11.4% (1,042 million).
In the period, Inditex completed openings in 20 markets, bringing its total to 213 markets, and by the end of the period it operated 5,745 shops.
The group’s in-store and online sales by geographical area improved their weight in Europe excluding Spain (47.8%) and in Spain (14.4%, more than 2.4 billion) up to July compared to the first half of 2022.
ON THE WAY TO 5,000 MILLION IN 2023
For the second half of this year, the fashion giant assures that the autumn-winter collections have been “very well received” by its customers.
According to the company, in-store and online sales at constant exchange rates between 1 August and 11 September have increased by 14% compared to the same period in 2022.
If it continues along these lines, the Galician fashion giant would be close to profits of 5,000 million by the end of the year.
In addition, the gross growth of the Inditex brands’ shop space this year will be, according to the company, around 3% and it will continue its task of optimising them, with an expected “positive” contribution of space to sales in 2023.
The shares of Inditex, the largest listed company on the Spanish stock exchange, started today with heavy losses despite the fact that its profit beat market expectations. Its shares fell 2.68 % (34.83 euros per share) half an hour after the start of the session and lead the falls of the entire national market.
In spite of this setback, in the accumulated of the year it revalorises more than 40 %. Inditex reaches a market capitalisation of 109,581 million euros.
