Inditex announced its first fiscal quarter results, at the premiere of Marta Ortega as the company’s president. The group that owns Zara or Massimo Dutti between February and April reported a net profit of 760 million euros, which is 80% growth over the same period last year. The figures include the allocation of €216 million for estimated expenditures in Ukraine and Russia for the whole of 2022. Without this allotment, the result would be 940 million euros.
The figure was slightly below the estimates of Bloomberg analysts, who had expected a net profit of 796 million euros in the three months, without taking into account provisions.
After things returned to normal, stores again became the company’s sales engine at the expense of Internet sales. Total sales of Inditex in the first quarter grew by 36%, to 6,742 million euros, backed by the restoration of traffic in stores and the good reception by customers of the group’s seven brands, the company explains. Experts predicted a decrease in sales of 6240 million.
However, growth in store sales has hampered online sales, which have fallen at a flat rate of 6% due to the “strong comparable base” since posting 67% growth in the first quarter of last year. Inditex expects online sales to exceed 30% of total sales in 2024.
For its part, operating result (Ebitda) grew 55% to 1,917 million euros, while Ebit grew 82% to 1,034 million euros, a figure similar to what analysts expected, at 1,050 million euros.
At the beginning of the second quarter, revenue is growing in the double digits. In-store and online sales at constant exchange rates between May 1 and June 5, 2022 grew 17% over the record period of 2021 and Inditex notes that their spring/summer collections are “really well received.”
Inditex highlights “strong growth in store traffic”. During the first quarter, store sales grew “amazingly” and continued that trend. Differentiation between Inditex stores was a major factor in this process.
According to the company, “all geographies except for markets subject to restrictions” recorded a “strong performance”. It also highlights the “strong growth” in the United States.
Gross margin grew 37% to 4,054 million euros. Gross margin was 60.1% (20 basis points increase from the first quarter of 2021), the highest level in 10 years.
During this period, 16 markets were opened, reaching 6423 stores.
In terms of outlook, Inditex continues to see “significant growth opportunities”. At current exchange rates, Inditex expects a “currency-neutral effect” on sales in 2022.
As approved in March 2022, the Inditex Board of Directors will propose to the general meeting of shareholders a dividend of 0.93 euros per share to be calculated on the results of the fiscal year 2021. This distribution consists of two equal payments of 0.465 euros per share: the first has already been implemented on 2 May 2022 and the second will be implemented on November 2, 2022. In March, the Board of Directors also proposed an extraordinary dividend of €0.40 per share to be paid in connection with 2022.
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