The clothing group Inditex can continue to defy the general slump in consumption. Sales and operating profit rose sharply in the first business quarter up to the end of April, as the Zara mother announced on Wednesday in Arteixo. According to the information, the new summer collections are also well received by customers, so that business has been good in the past few weeks. Analysts were enthusiastic and the stock market also reacted enthusiastically in the middle of the week.
The Spaniards’ considerable business figures, which have been impressive for months, have provided a tailwind – last year, for example, Inditex achieved record profits despite the Ukraine war and the withdrawal from Russia.
Online trading is developing “very satisfactorily”
The strong run continued into the first fiscal quarter, which begins at Index in early February. In the three months under review, revenue rose by 13 percent year-on-year to EUR 7.6 billion. All regions have contributed to this, and online trade is also developing “very satisfactorily”, according to the company, which, in addition to Zara, also owns the brands Bershka, Massimo Dutti, Oysho, Pull & Bear and Stradivarius.
Earnings before interest and taxes (EBIT) climbed even faster than sales – growth here was 43 percent to just under 1.5 billion euros. However, a negative special effect in connection with the withdrawal from the Russian business had weighed on the result last year. The bottom line was that the profit was now almost 1.2 billion euros, 54 percent above the same period last year.
Sales more than 40 percent above the pre-crisis level
According to JPMorgan analyst Georgina Johanan, the quarter was better than expected in all areas. The operating result and net profit were well above market expectations, wrote the industry expert in a first reaction. While sales are at the upper end of analysts’ forecasts, the gross margin – despite a significant braking factor due to negative currency effects – was better than expected. With sales that are now more than 40 percent above the pre-crisis level at Inditex, the comparison with the weakening competitor Hennes & Mauritz is rather limited, Johanan added.
Inditex leaves the competition behind
The Spaniards have been trailing their Swedish rivals in terms of revenue for some time now. While Inditex was weakening before the pandemic, also due to pressure from cheaper competitors such as Primark, the group has now picked up speed thanks to various modernization measures. But H&M was also able to grow again after disappointing figures for the past financial year – next week, on June 15, the Inditex rival wants to present its sales figures for the past quarter.
Meanwhile, Inditex also reported an increase in sales for the first few weeks of its new, second business quarter: From the beginning of May to June 4, sales in the branches and in online trading increased by 16 percent at constant currencies, it said. The pace of growth thus accelerated compared to the start of the year. (dpa)
Editor’s note: This article was updated on June 7, 2023 at 10:55 am.