Inditex breaks profit record until October with 4,102 million but suffers ‘heatstroke’ in autumn sales

2023-12-13 09:18:34

Madrid

Updated Wednesday, December 13, 2023 – 08:18

The textile giant is already close to the profits achieved in all of 2022 but it slows down in sales in the third quarter due to high temperatures

Inditex It increased its profit by no less than 32.5% in the first nine months of its fiscal year and reached profits of 4,102 million euros until October, which at this point in the year is already close to the entire accumulated profit in 2022. , which closed with 4,130 million. However, the textile giant has not been immune to high temperatureswhich have impacted its sales in the third quarter.

The results presented this Wednesday before the National Securities Market Commission (CNMV) reflect the good operational performance of the group chaired by Marta Ortega, which continues to break record after record both in terms of profits and income. However, they also attest to a slowdown in the pace of sales growth compared to previous periods.

Specifically, in the third quarter, which runs from August to October, sales reached 8,758 million euros, which represents an increase of 6.7% compared to the 8,210 million achieved in the same period last year. And this means a considerable slowdown, since it means the lowest year-on-year advance in the last 11 quarters and breaks the good streak of 10 consecutive quarters of double-digit growth.

Although the company explains in the presentation of results that the autumn-winter collections were “very well received”, the unusual climatic conditions, with high temperatures that especially hit southern Europe well into the fall, have shifted winter clothing purchases to November and December, when the cold begins to really feel.

In any case, the largest textile distribution group in the world continues to show muscle to investors, at a time when shares are moving in the zone of historical highs, with a revaluation of practically 50% in the year and a value in bag that is already bordering 120,000 million euros.

And the results presented this Wednesday show a growth in sales of 11.1% in the first nine months of the year, up to 25,609 million euros, with an increase of gross margin of 12.3%, up to 15,203 million euros, standing at 59.4% of sales, compared to 58.7% a year ago. With all Ebitda rose by 13.9%, reaching a total of 7,429 million euros in the accumulated amount for the year.

The company also highlights the “strong generation of funds”, since the net box It has increased by 15% compared to the same period in 2022, reaching 11,480 million euros. An improvement in the financial position that occurs in a context of normalization of the conditions of the supply chain, which has also allowed reduce inventory 5%, up to 4,404 million euros, and with a more favorable euro/dollar exchange rate compared to the same campaign last year.

Inditex also advances in this presentation of results the sales evolution at the start of the fourth quarter of the fiscal year and anticipates that “the company’s fall/winter collections have been very well received” and that in-store and online sales between November 1 and December 11, 2023 have grown by 14% compared to the same period last year.

Likewise, the textile giant projects that, with the information available at this time of the year, it is in a position to generate a gross margin around 75 basis points higher than what it achieved in 2022, which would mean reaching 57.75% of sales. The company, with presence in 213 marketsemphasizes that the low share in each of them offers “strong growth opportunities” in a highly fragmented sector and estimates a growth in its commercial area of ​​around 3% in 2023.

Among its priorities, the group highlights “continuously improving” the fashion proposal, reinforced by its powerful logistics machinery that allows it to reach stores in record time; “optimize the customer experience”, with innovations such as hard alarm removal; “increase the focus on sustainability”, with launches such as the Zara Pre-Owned second-hand platform, which has just landed in Spain; “and preserve the talent and commitment of our people.” “Prioritizing these areas will drive long-term growth,” she concludes.