Inditex powers ahead in first half, early H2 sales stay positive

By

Sandra Halliday

Published
Sep 14, 2022

Inditex reported its first-half results on Wednesday and once again showed why it’s such a hugely successful fashion retail giant. It talked of a “very strong operating performance” with sales, EBITDA and net income at “historic highs”.

With the SS22 collections proving popular, sales soared 24.5% to €14.8 billion and in constant currencies they grew 25%, with sales positive in all key geographical areas. That was despite the disruption to operations due to the war in Ukraine.

Importantly too, it said the AW22 collections “have been very well received by our customers. Store and online sales in constant currency between 1 August and 11 September increased 11% versus the record period in 2021”.

That's crucial because many fashion retailers have begun to report slowdowns, with August in particular having proved difficult. Although the company has seen slower sales rises in the last few weeks, it's still well ahead. The group has also temporarily ramped up production to battle expected supply chain issues for the season ahead.

Looking again at the first half, the company said that traffic and store sales “increased markedly” during the period “and continue to do so, with store differentiation being key to this dynamic”. Online sales also “progressed satisfactorily” and were positive in the second quarter. E-sales are expected to exceed 30% of total sales by 2024.

Gross profit increased 24.5% to €8.6 billion and the gross margin reached 57.9%, the highest in seven years. It added that “the control of operating expenses has been rigorous. Operating expenses increased by 20%, below sales growth”.

Meanwhile, EBITDA increased 30% to €4 billion and EBIT increased 44% to €2.4 billion, with pre-tax profit up 42% to €2.3 billion, while net income increased 41% to €1.8 billion.

CEO Oscar García Maceiras said: “The results are explained by four factors, key to our performance. Our unique fashion proposition, an increasingly optimised shopping experience for our customers, our focus on sustainability, and the talent and commitment of our people. Our business model is progressing at full pace and has great growth potential going forward.”

The company opened new stores in 24 markets during H1 and at the end of the period, it operated 6,370 stores. 

Zara (and Zara Home) was the dominant chain, as usual, and its sales rose 29% to €10.9 billion. Pull&Bear rose 19% to €936 million, Massimo Dutti 10% to €721 million and Bershka 15% to €1.05 billion. Stradivarius was up 17% to €913 million but Oysho was down 4% at €293 million.

The company also saw sales rising 46.1% in Europe (excluding Spain), while the Americas rose 20.1%, Asia and the rest of the world were up 19.4% and Spain rose 14.2%.