The company is down more than 4.5% in the national prosecutor’s office, given the foreseeable increase in costs that initial estimates place at some 167 million.
Action. After weeks of tension and protests, Inditex agrees to a fixed minimum wage of €18,000 for its employees across Spain. Response. Investors are undoing positions in anticipation of the impact of this increase in costs on income and the company’s titles are down 4.5% on the Spanish stock market, even losing 28 euros per share.
Experts agree that beyond macro references such as inflation or labor market data, the market is particularly closely following the evolution of business variables, such as, for example, costs that skyrocketed last year due to the energy crisis. Now all eyes are also on the impact of inflation on wages and on the expected increases for this year.
The first reviews of the company’s decision have already begun to reach the market. Elena Fernández-Trapiella, a Bankinter analyst, recalls that Inditex had a total of 6,477 stores in Spain at the end of 2021, 19.5% of the total.
“Assuming a salary increase of 20% for the Spanish workforce, which represents 9.7% of operating costs, this would result in a cost increase of 167 million euros or 3.3% of the group’s operating profit”.
According to experts, this is negative news. However, they emphasize that “Inditex can offset this with other cost savings and economies of scale.”
In any case, the company’s downturn in the stock market comes after a spectacular start to the year, in which value, one of the heaviest in the Ibex-35, is up 16% (with data at the end of Thursday, when it was trading at around 29 euros per share).
Source: La Verdad
I’m Ben Stock, a journalist and author at Today Times Live. I specialize in economic news and have been working in the news industry for over five years. My experience spans from local journalism to international business reporting. In my career I’ve had the opportunity to interview some of the world’s leading economists and financial experts, giving me an insight into global trends that is unique among journalists.
