Inditex boosts its profit by 54% and breaks a sales record in the best first quarter in its history

Some shoppers walk past a Zara clothing store, owned by the Spanish group Inditex. (Reuters)

From record to record and I shoot because it’s my turn. Marta Ortega continues to reap success at the helm of Inditex, which has closed a record first fiscal quarter -which includes the period between February 1 and April 30-, both in terms of profits and sales. Specifically, the company founded by Amancio Ortega has earned 54% more, up to 1,168 million euros, thanks to strong operating performance.

Likewise, group sales rose 13% compared to the same quarter of the previous year -also historic for the company- to reach 7,611 million euros, boosted by a general increase in purchases both in physical stores and in format on-line. For its part, the gross margin grew by 14% to 4,603 million euros and stood at 60.5%. Operating expenses grew 13%, below sales growth.

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The operating result (Ebitda) grew by 14%, to 2,195 million euros, while the net operating result (Ebit) grew by 43% to 1,483 million euros and the result before taxes by 52%, to 1,505 million euro. “In line with the solid execution of the business model, the flows generated increased significantly,” the company underlined.

In this period, the Zara parent company has continued its expansion with the opening of stores in 17 markets, which has allowed it to reach 5,801 establishments. Thus, and despite fears that the price rise would have an impact on consumption, the Galician textile company has stressed that the spring-summer collections continue to be “very well received” by its customers, which is reflected in its sales of the start of the summer campaign: between May 1 and June 4, 2023 they have grown by 16% compared to the same period in 2022.

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Inditex is present in 213 markets, with a low share in each of them and in a highly fragmented sector, which is why it continues to see “great growth opportunities” and estimates an ordinary investment of around 1,600 million euros in 2023. In This year, the firm has planned investments to increase operating capacity, obtain efficiencies and increase differentiation to the next level.

Specifically, the company has explained that its priorities are: to continuously improve its fashion proposal; optimize the customer experience; increase our focus on sustainability; and preserve the talent and commitment of its workforce. “Giving priority to these areas will boost growth in the long term,” he stressed.

“To take our business model to the next level and further expand our differentiation, we are developing different initiatives for the coming years in all key areas,” he added. Likewise, the company continues to estimate a “strong” sales productivity in its stores, so that the gross growth of the space in 2023 will be around 3%. “The optimization of the stores is an ongoing task,” highlighted the company, which 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 total sales of the group”, has indicated the group that, at current exchange rates, expects a currency impact of -2, 5% on sales in 2023.

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