Inditex ended the first few months of its fiscal year with sales of 28,171 million euros, up 2.7%, and a net profit of 4,622 million, up 3.9% on the previous year, according to financial information published today before the National Securities Market Commission (CNMV). These are record numbers for the group in both variables, after the third quarter that occurred between August and October, which led to an improvement in the growth rate we witnessed in previous quarters. What was well received by the market: Inditex’s share price rose by 9% during the session.
The revenues generated during these three months amounted to 9,814 million, an increase of 5%, after applying the types of disbursement. This percentage is higher than analysts’ expectations, resulting in an improvement of about 4% in this quarterly period.
In local currency, growth will be 8.4%, which means that Inditex has managed to maintain part of the rhythm with which it began this period, despite expectations of a sectoral expansion in Europe that would affect the Galician giant.
However, this, which also confirmed before the CNMV the appointment of Deloitte as auditor from 2027 onwards to replace EY, managed to maintain momentum, despite growing by less than 2% in the first quarters.
It is the trend that is maintained at the beginning of the fourth quarter, which includes Black Friday, Christmas and energy saving campaigns, and is the trend that enjoys the largest volume of sales. This began with a 10.6% improvement in sales in local currency terms between November 1st and December 1st. As of November 24, the percentage was 9%, which means a positive Black Friday for the company, despite the very conservative promotion policy. “The fall/winter campaign collections continue to be well received by our customers,” the group states in information sent to the CNMV.
In terms of profitability, profits between August and October rose to 1,831 million euros, an increase of 8.9% compared to last year, which is the best quarter in the group’s history in this division. The third quarter of each exercise is one of the biggest gains for Inditex throughout the year, due to the absence of promotional campaigns during its course, which allows it to sell its gifts at full price.
This is also reflected in the gross profit margin, which in these months rose to 62.2% of sales, 79 basis points higher than the previous year. This allows you to increase the margin on your gross income to 59.7% of income, which is 27 basis points better, and online what the company commits to pre-market. Quarterly EBITDA also improved by 8.9%, reaching 3,189 million, and EBITDA increased by 11.2%, reaching 2,372 million.
Therefore, the net benefits for the first few months of the year amount to €4,622 million, a year-on-year improvement of 3.9%, after the first half of the year which ended with a floor allocation of 0.8%. Cash position at the beginning of October was 11,268 million, of which 6,000 were cash and cash equivalents.
Figures that the company attributes to the pure implementation of its model. “Here there are no structural changes, and this is the result of good implementation,” explained the responsible financier, Andres Sánchez Iglesias, at a conference with analysts.
“The growth we are seeing in these years is due to the performance of the business model, the performance of the teams and the core culture of maintaining differentiation in the fashion show,” analyzed the commissioning consultant, Oscar García Maceras, who links these increases to the continued investment in stores and logistics. “We will continue to do this to seize new opportunities for growth,” he says.
Coups
As of 31 October, Inditex was operating in 214 markets with 5,527 stores, 132 fewer than the previous year, and one fewer than at the end of the first semester. “Store optimization continues on its trajectory and we hope to drive new improvements in productivity,” the company says. This also maintains expectations of a 5% increase in its sales surface, “accompanied by strong online sales.”
Inditex has started implementing its new alarm system in Bershka and Pull & Bear, and is now doing so in Zara. It even does so without the strong alarms associated with gifts.
On the logistical level, it continues to implement its planned investment plan until 2024 and 2025, at a value of 900 million euros each. This year the distribution center in Zaragoza 2 was opened and put into operation. On the other hand, at its headquarters in Artexo, it opened the new building in Zara in October, where it worked product equipment for the women’s and children’s lines.