The textile giant Inditex reached a net profit in the first nine months of your fiscal year of 2,500 million euros, 273% more than in the same period of the previous year. Between February 1 and October 31, sales reached 19,325 million euros, 37% higher than a year earlier. Store sales in the third quarter exceeded the figures for the same period of 2019 before the pandemic. Online sales continue to grow, around 28% at a constant exchange rate with respect to last year and 124% compared to the first nine months of 2019. Inditex expects online sales exceed 25% of total sales in fiscal year 2021.
Inditex’s quarterly balance sheet comes after the announcement by the company founded by Amancio Ortega of the accession to the presidency of his daughter Marta, and the appointment at the end of the year as new CEO of Óscar García Maceiras, instead of Pablo Isla. The results of the third quarter represent a blanket of roses for that agreed transition and a good starting point for new objectives. In any case, the evolution of the pandemic and the unstable evolution of the value of the share on the stock market are uncontrollable elements for the management of the company and the main headache for its owners in the face of a new stage in the direction that generates doubts, despite that nothing yet indicates that it implies a change of course compared to the ‘Island style’.
Inditex’s differentiation and strategic transformation towards a fully integrated, digital and sustainable business model is accelerating. During the third quarter, sales growth at constant exchange rates has progressively accelerated to 21% compared to 3Q2020 and 10% compared to 3Q2019.
In the first nine months, openings were made in 39 markets, which has led to the group having 6,657 stores. Store sales in 3Q2021 exceeded the 3Q2019 figures at constant exchange rates, with 11% fewer stores.
Gross margin stood at 11,409 million euros, 40% higher than in 9M2020. Gross margin reached 59% (58% in 9M2020). Operating expenses increased 24% compared to 9M2020. Operating income (EBITDA) grew 63% to 5,431 million euros and operating income (EBIT) grew 248% to 3,293 million euros. Profit before tax grew 277% to 3,231 million euros. The net financial position as of October 31, 2021 increased by 16% to 9,569 million euros over the previous year. The net financial position grew by 1,546 million euros in 9M2021 compared to the end of 1H2021. Inditex paid 1,089 million euros (0.35 euros per share) on November 2, 2021 as the final dividend for Fiscal Year 2020.
Inditex maintains an agenda on sustainability focused on achieving net zero emissions by 2040, 100% more sustainable cotton by 2023, 100% renewable energy by 2022 and elimination of single-use plastics for customers in 2023, among others.
A good part of the analysts expected that Inditex will achieve 45% profit growth in the third quarter of the fiscal year compared to last year and 6% compared to 2019 before the pandemic.
Analysts were optimistic about the presentation of results and especially highlighted the efforts to reduce rental costs and the closure of inefficient points of sale. In a context of screening of points of sale, it is estimated that organic growth will tend to moderate in the last fiscal quarter. The demanding agenda around sustainability objectives, a personal commitment on the part of the new managers and Marta Ortega in particular, is a drag on difficult growth. Although Marta Ortega will not have an official executive function, in the sector they tend to think that she will have great influence from a strategic point of view and in the possible opening of the group to new lines of business or brands.
Eddie is an Australian news reporter with over 9 years in the industry and has published on Forbes and tech crunch.