Inditex sales and profits continue to rise, despite weakening backdrop
Inditex’s nine-month results on Wednesday saw the Spanish fashion retail giant posting a 24% surge in net profit as sales rose, despite the tough global backdrop. Net profit in the period to the end of October reached €3.1 billion.
Sales in-store and online rose 19% to €23.1 billion (or 20% constant currency) at the world’s biggest fashion retailer, which was a little more than analysts had expected. They grew in all geographies as the company offset higher costs with 5%+ price rises without losing customers in the process.
In the third quarter from August to October, turnover was €8.21 billion, up 11% and a record figure for the period, while net profit was €1.301 billion. And importantly for the owner of Zara, Massimo Dutti, Pull & Bear, Bershka, Stradivarius and Oysho in Q4 so far, sales are up 12% on the year.
Q3 and Q4 have been slower than previous quarters, but they’re still respectable results, given the increasingly weak consumer environment around the world.
Looking back at the first nine months, gross profit increased 19% to €13.5 billion and the gross margin reached 58.7% with the control of operating expenses being “rigorous”. It meant such expenses increased by 17%, which was less than the sales growth figure.
EBITDA increased 20% to €6.5 billion and EBIT 27% to €4.2 billion, while profit before tax increased 25% to €4 billion.
The company said its “fully integrated model maintained a very strong operating performance” and CEO Óscar García Maceiras said: “In the current challenging context, these results clearly reflect the strength of our unique business model: fashionable collections, an appealing shopping experience and a team highly committed to achieving achieve profitable and more sustainable growth”.
Inditex said its AW22 collections “were very well received by our customers” and that over the nine months as a whole, its “traffic and store sales increased markedly. Key to this was store differentiation”.
Online sales meanwhile continued progressing “satisfactorily” and were above the record figures of the previous year’s first nine months, although it didn’t say how far above. But it did say that online sales are expected to exceed 30% of total sales by 2024.
The company added that it “continues to see strong growth opportunities” and its key priorities are to “continually improve the product proposition, to enhance the customer experience, to maintain our focus on sustainability and to preserve the talent and commitment of our people. Prioritising these areas will drive long-term organic growth”.
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