New record in the benefit of Inditex. The Galician multinational has closed the best fiscal third quarter in its history (which runs from August 1 to October 31) with earnings of 1,301 million euros, which means an increase of 6% compared to the same period of the previous year, as reported by the company this Wednesday in a statement. This figure is due to 11% increase in sales, reaching 8,210 million. This is the first time that it has managed to exceed 8,000 million in a quarter.
In the accumulated of the first nine months of its fiscal year (between February and October), the group has registered a net profit of 3,095 million euros, which represents an increase of 24% compared to a year earlier. In this period, sales have also risen to 23,055 million, 19% more than in the same period of 2021 (+20% at constant exchange rates) and have been positive in all geographical areas.
The gross margin It has stood at 13,532 million euros, 19% higher than the previous year, and represents 58.7% of sales. Also, the gross operating result (Ebitda) has grown by 20% to 6,520 million and the net operating result (Ebit) has also increased by 27% to 4,177 million euros.
In the third quarter of its fiscal year, a charge of 14 million euros has been included in ‘Other results’, in addition to the extraordinary charge of 216 million euros recorded in the accounts for the first quarter. Inditex estimates that this provision “substantially” covers the impact of the Group’s cessation of activity in the Russian Federation. «In a very demanding environment, these results clearly show the strength of our unique model: collections with a high fashion component, an attractive shopping experience and a highly committed human team to achieve profitable and more sustainable growth»has highlighted Óscar García Maceiras, CEO of Inditex.
Regarding sales in store and online at a constant exchange rate between November 1 and December 8 of this year, these have increased by 12% compared to the same period in 2021. Inditex has carried out openings in 30 markets. At the end of the period, the group had 6,307 stores.
In these first nine months of its fiscal year, the execution of the business model has also been very outstanding. The gross margin It has stood at 13,532 million euros, 19% higher than in the same period of 2021, and represents 58.7% of sales. On his side, he control of operating expenses it has been rigorous. The operating expenses have increased by 17% over the previous year, below sales growth.
Prospects for the year 2022
Inditex continues to see strong growth opportunities. As the company has assured, the priority lines of action are to continue improving the fashion proposal, constantly optimize the customer experience, maintain its focus on sustainability and preserve the talent and commitment of people. The development of these lines will continue to drive organic growth in the long term. “The business flexibility and responsiveness, together with local supply in season, allows a quick reaction to fashion trends and favors a unique position in the market. Our fully integrated business model has great growth potential»they have reiterated.
The future growth of the group is based on the investment in stores, in the developments carried out in the online sales channel and in the improvements in logistics platforms, with a clear commitment to innovation, technology and sustainability. Inditex hopes that online sales exceed 30% of total sales in 2024. The group estimates that ordinary investment in 2022 will be approximately 1,100 million euros.
Sustainability
The sustainability It is key to Inditex’s strategy. The company continues its progress to meet all the objectives of the sustainability roadmap set for 2022, 2023 and 2025, with a special focus on two pillars: innovation through Sustainability Innovation Hub (SIH) and circularity.
On November 30, Inditex launched the new detergent The Laundry by Zara Home, available in stores and online in more than 25 markets. Developed jointly by Inditex and BASF, this innovative product reduces the release of microfibers by up to 80%. In addition, at the beginning of November, the group also released in the United Kingdom Zara Pre-Owneda pioneering integrated platform available through Zara stores, Zara.com and its mobile application.
“This initiative is a further step forward in our circularity approach by providing garment repair, resale and donation services to the customer. Through this platform, customers will be able to extend the life cycle of their garments and contribute to reducing waste.”they have assured.
By your side, Emily Salter, Senior Apparel Analyst at GlobalDatahas also offered his point of view after knowing the financial results of the group: «Inditex has continued its outperforming market, with global net sales rising from €3.7bn to €23.1bn for the nine months to October 31, 2022, as the group’s strong fashion credentials drive strong demand, with third-quarter year-to-date growth slowing slightly versus first half, to 19.3% from 24.4%, despite first half facing weak lockdown comparisons ”.
“The Sales growth at the beginning of the fourth quarter, from November 1 to December 8, softened further to 12% in constant currency, but still an impressive performance considering macroeconomic constraints in its key European markets, as Inditex brands will have been popular destinations for consumers looking for clothing for celebrations and festive events in the run-up to the first Christmas after the Covid-19 pandemic”, has underlined. Yet she has continued, “Trade will be more challenging in 2023 in Western Europe and the United States, as inflation remains stubbornly high. Although its great appeal among buyers will protect Inditex somewhat, you need to promote your brands value-for-money credentials to stay in favor with cash-strapped buyers”.
“The group posted online sales above record figures for the comparative period, as it continues to invest in making the online shopping experience as seamless as possible, including the integration of digital and physical channels. Inditex continues to invest heavily in stores, with the store Zara Battersea Power Station in London, which opened the brand’s most advanced retail concept yet and its largest store in the UK in October. The store has a more upscale feel than other Zara locations, making it a very aspirational place to shop, and it has numerous digital features that make the shopping journey more convenient, such as an online auto return point and the ability to pick up online orders in two hours. Are in-store innovations ensure that Zara stores are exciting places to shop, and keep Inditex’s online penetration relatively low compared to other apparel players, as it only expects online sales to reach 30% of its total sales by 2024.”has pointed out.
In addition, he has highlighted “In her third trimester, Inditex also continued its commitment to be more sustainablee, and while many consumers de-prioritize sustainability when under financial pressure, these actions will be beneficial in the long run in boosting brand awareness.”.