Inditex weathers the crisis with record turnover and profit

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The textile giant says goodbye to its first semester with a profit of 1,794 million, 41% more and a turnover of 14,845 million, 24.5% more

Inditex is raising the bar against its competitors amid uncertainty about the impact of the inflation scenario on consumption. The textile giant presented some results this Tuesday that convinced not only analysts and investors, with gains of more than 5% in the Spanish stock market for the company at the start of the session, but also all those who doubted the capacity of the signature after the departure of Pablo Isla at the head of the company, who was succeeded by Marta Ortega.

Also. The tandem Ortega-García Maceiras (CEO of Inditex) seems to be working perfectly and in the first fiscal semester (1 January – 31 July) the company achieved a net profit of 1,794 million euros, 41% more compared to the same period of the previous year .

And what is more important. Sales were positive in all geographic areas, growing 24.5% despite the difficulties for consumption caused by the current energy crisis caused by the war in Ukraine. In total, they reached 14,845 million euros in the period.

Exactly, the company has already provided for the estimated costs for the fiscal year 2022 for the departure from these regions after the outbreak of the conflict. An exceptional charge of 216 million euros already included in the accounts for the first quarter of this year in the line ‘Other results’.

Despite this provision, gross margin for the semester was 57.9% of sales, the highest in seven years.

“These results are explained by four key factors in our performance. Our fashion proposition, a continuously optimized shopping experience for our customers, our focus on sustainability and the talent and commitment of our people. Our business model is operating at full capacity and has great potential for future growth,” emphasized Inditex CEO Oscar García Maceiras.

For example, the textile group is responding to the difficult scenario in which the sector is operating, with all its brands posting good results, with the exception of Oysho, which recorded a 4% decline in sales over the period.

Zara (which also includes the figures for Zara Home) is currently leading again, with a turnover of 10,927 million euros in the semester, almost 30% more than in the previous semester. And Pull&Bear, Massimo Dutti, Bershka and Stradivarius are also growing by double digits.

By region, Europe (excluding Spain) continues to lead and accounts for 46% of the company’s turnover. America’s greater weight is also notable, jumping from 17.3% last year to 20.1%. In Spain, turnover increased by 25% to 2,108 million euros and amounts to 14.2% of the total.

One of the ‘buts’ that can be attached to these results is that of online sales. The company has not communicated the evolution of this company, although it assures that it has evolved “satisfactorily”, expecting it to reach the target of exceeding 30% of total turnover by 2024.

Given the current situation and given possible supply chain tensions in the latter part of the year, the textile group founded by Amancio Ortega claims to have temporarily anticipated stock imports for the autumn/winter campaign.

Therefore, as of July 31, 2022, the stock grew by 43%. “Fall/Winter inventory is of high quality and consistent with the positive sales trend in recent quarters and strong growth so far in 2H2022. As of September 11, 2022, inventory levels are 33% higher,” the company said.

The outlook for the autumn/winter campaign is therefore positive. Inditex even explains that sales increased by 11% at the start, between August 1 and September 11.

Source: La Verdad

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