Inditex : reports first-quarter revenue growth of 36%

08 June 2022

Inditex reports first-quarter revenue growth of 36%

• The quarter was marked by a sharp recovery in store footfall and a warm reception for all seven brands' new season collections.
• Revenue growth was strong in all geographies, except those subject to restrictions during the period. The US market continued to post notable growth, cementing its position as the Group's second biggest market.
• Group revenue from online sales declined by just 6% year-on-year as stores reopened, meaning that the group has retained almost all of the extraordinary online growth of 67% achieved in 1Q21.
• The gross margin expanded to 60.1%, the highest level in a decade.
• The first-quarter results include a €216 million provision for estimated costs related to Ukraine and Russia for all of 2022.
• Net income increased to €760 million. Net income ex provision would have been €940 million.
• Sales increased by 17% in constant currency between 1 May and 5 June 2022.

Inditex Group reported first-quarter (1 February - 30 April 2022) revenue growth of 36% to €6.74 billion, underpinned by a sharp recovery in store traffic and a good reception for all seven brands' newseason collections.

Growth was robust across all geographies, with the exception of Ukraine and Russia where the Group's stores (including its online platforms) have been temporarily closed, since 24 February and 5 March respectively, and China, where 67 stores were affected by COVID-related restrictions. The US market continued to post notable growth, cementing its position as the Group's second biggest market.

Revenue from online sales remained buoyant, down just 6% year-on-year, therefore consolidating nearly all of the growth of 67% recorded in 1Q21.

Óscar García Maceiras, Inditex´s CEO, said that this set of earnings is the result of a "well-differentiated model that is delivering strongly. The strength and adaptability of the business model and the excellent performance of our creative, sales and operating teams are driving that differentiation forward, underpinned by a strategic focus on innovation, digitalisation and sustainability".

Net profit amounted to €760 million, up 80% year-on-year, thanks to the Group's strong business performance. The gross margin came in at 60.1%, the highest level in a decade, while growth in operating expenses (+24%) was below sales growth.

The company has decided to recognise a provision of €216 million to cover all of the extraordinary costs derived from the temporary closure of our business in Ukraine and Russia. That provision has been recognised under "Other results"; without it, the Group would have reported net profit of €940 million.

The Group's strong business momentum is evident throughout the balance sheet. EBITDA registered growth of 55% to €1.92 billion, while EBIT grew by 82%, to €1.03 billion.

The Group continues to combine constant reinvestment in business growth with strong cash flow generation, leaving net cash at €9.19 billion (+28%) as of 30 April.

With respect to the start of the second quarter, the spring-summer collections have received an excellent response from the Group's customers. Sales increased by 17% in constant currency between 1 May and 5 June 2022 (13% during the last two weeks of the period).

Inditex continues to accompany its solid business performance with constant progress on delivery of its sustainability targets, with the ultimate goal of using cutting-edge technology to move the textile industry as a whole towards circularity.

To that end, in May, Inditex signed a three-year agreement worth over €100 million with Infinited Fiber Company, under which it has committed to purchase 30% of future production of Infinna™, a textile fibre created entirely from textile waste.

This project is yet another product of Inditex's Sustainability Hub, our open innovation platform created to promote and scale up innovation in materials, technologies and processes that move forwards towards sustainable solutions.

Annual General Meeting

Inditex has scheduled its Annual General Meeting for 12 July. The Board of Directors will propose the company's shareholders to approve the payment of a total dividend from 2022 profits of €0.93 per share, €0.465 of which was paid out on 2 May 2022; the balance would be paid on 2 November 2022.