Inditex beats forecasts with a profit of 1,168 million and soars on the Stock Market

Inditex explained that in the first quarter “it continued with its strong operating performance, based on the creativity of its teams and the good execution of its integrated store and online business model”. The sales grew by 13% to 7,611 million euros, with a “very satisfactory” evolution both in stores and online, and they were positive in all geographical areas and in all formats. Sales at constant exchange rates grew by 15%.

The gross margin grew by 14% to 4,603 million euros and stood at 60.5% (+34 basis points compared to 1Q2022).

All expense lines have evolved favourably. Operating expenses increased 13%, below sales growth.

He operating result (EBITDA) grew by 14% to 2,195 million euros. EBIT increased by 43% to 1,483 million euros and the result before taxes by 52%, to 1,505 million euros. In the first quarter, Inditex provisioned the estimated expenses for the 2022 financial year in the Russian Federation and Ukraine for 216 million euros in the Other results line. Net profit grew by 54% to 1,168 million euros compared to 760 million in 1Q2022. Net profit without the provision in 1Q2022 would have been €940 million.

Due to the strong operating performance, cash generation has grown significantly, the company says. Thus, net cash increased by 14% to 10,508 million euros in the first quarter.

Inditex is present in 213 markets, with a low market share in each of them and in a highly fragmented sector, which is why it sees “strong growth opportunities”. We continue to estimate strong sales productivity in our stores. “The gross growth of space in 2023 will be around 3%. Store optimization is an ongoing task. Inditex expects the contribution of sales space to be positive in 2023. We continue to experience a very positive evolution in online sales and we expect a growing share of the same in the group’s total sales. At current exchange rates, we expect a -2.5% currency impact on sales in 2023.”

In 2023 Inditex expects a stable gross margin (+/-50 bp). This year, investments have been planned to increase operating capacity, obtain efficiencies and increase differentiation to the next level. We estimate an ordinary investment of around 1,600 million euros in 2023.

The Board of Directors of Inditex will propose to the General Shareholders’ Meeting the approval of a dividend of 1.20 euros per share charged to the results of the 2022 financial year. The dividend is made up of two equal payments of 0.60 euros per share: the first was paid on May 2, 2023 and the second will be made on November 2, 2023.

The market has enthusiastically welcomed these figures, with a rise in Inditex shares that exceeds 7% at mid-afternoon until marking 34.11 euros. The textile giant is by far the company with the highest market capitalization on the Spanish Stock Market, already exceeding the barrier of 100,000 million euros.


Leave a Reply

Your email address will not be published. Required fields are marked *