Industria de Diseño Textil S A : Presentation English , PDF, 5.12MB

Interim

Nine

Months

2020

15 December 2020

Disclaimer

This document and the information herein does not constitute an offer to sell, to buy or to exchange, nor an invitation to make an offer to buy, to sell or to exchange, nor a recommendation or advice, regarding any security issued by the Inditex Group.

This document contains forward-looking statements. All statements other than statements of historical fact included herein, including, without limitation, those regarding our financial position, business strategy, management plans and objectives for future operations are forward-looking statements. Any such forward-looking statements are subject to risk and uncertainty and thus could differ materially from actual results.

Some of these risks include, amongst others, ongoing competitive pressure in the sector, consumer tastes and spending trends, economic, political, regulatory and trade conditions in the markets where the Inditex Group is present or in the countries where the Group's products are manufactured or distributed.

The risks and uncertainties that could affect the forward-looking statements are difficult to predict. The company assumes no obligation to publicly revise or update its forward-looking statements in the case of unexpected changes, events or circumstances that could affect them. Given the uncertainties of forward-looking statements, we caution readers not to place undue reliance on these statements.

For a discussion of these and other factors that may affect forward looking statements and the Inditex Group's business, financial conditions and results of operations, see the documents and information communicated by the company to the Comisión Nacional del Mercado de Valores (the Spanish Securities Commission).

The contents of this disclaimer should be taken into account by all persons or entities.

Interim Nine Months 2020

2

Overview

3Q2020: Very strong operating recovery

• Remarkable execution in a challenging operational environment
• Initial collections for Autumn/Winter 2020 very well received by our customers
• Practically all stores reopened in 3Q2020 but still with restrictions. Store sales recovering progressively
• Outstanding growth in online sales continues
• Strong cash flow and financial condition
• Fully confident in our unique business model and strategy: Store & Online integration, digitalisation and sustainability

Interim Nine Months 2020

4

3Q2020: Very strong operating recovery

 Store sales recovering progressively despite restrictions in 88% of stores. 5% of stores remained closed in 3Q

 Online sales continue growing at an outstanding pace

 Store & Online sales 1-18 October already at high historic level of 2019

 New phase of closures and restrictions established from 19 October in various markets

Interim Nine Months 2020

5

3Q2020: Stores in operation

Interim Nine Months 2020

6

3Q2020: Increasing store traffic

 Increasing store traffic and conversion

 Premium very balanced store base

▪

▪

▪

Broad geographical presence with small share per market

Balanced split between street/shopping centre

City centre stores in capital cities account for less than 8% of sales

• 95% of store base optimised starting 2012
• Integrated, eco-efficient, digital

Interim Nine Months 2020

7

3Q2020: Online sales +76%

1. bn

1. bn

Online sales €

1. bn

1. bn

1. bn

1. bn

1. bn

2017 2018 2019 2020E

• 9M20: Strong online progression
• +75% increase in online sales in constant currency. +44% increase in online visits to 3.4 bn
• 97% of online growth organic
• Strong growth continues into 4Q2020
• Confirms strength of business model and fashion proposition
• Sector leading growth and profitability
• Non-dilutiveto margins and lower capital intensity

Interim Nine Months 2020

8

3Q2020: Outstanding operating performance

 Efficiencies from single inventory position

 Technology enabled by RFID & SINT. Fully rolled out by 2020

 In-store inventory to fulfill online orders

 Store optimisation improves inventory allocation

 Higher product availability and full price sales

 Strong cash generation

Interim Nine Months 2020

9

Unique business model: Global fully integrated Store & Online

Interim Nine Months 2020

10

Zara Woman A/W collection

Interim Nine Months 2020

11

Zara Man Monochrome Layers

Interim Nine Months 2020

12

Zara Kids The Wanderers

Interim Nine Months 2020

13

Zara Home Interiors with a soul

Interim Nine Months 2020

14

Massimo Dutti Interlude editorial

Interim Nine Months 2020

15

Bershka Winter Calls

Interim Nine Months 2020

16

Pull&Bear: Art for everyone

Interim Nine Months 2020

17

Stradivarius Magical Allure editorial

Interim Nine Months 2020

18

Oysho Join Life Yoga & Meditation

Interim Nine Months 2020

19

Uterqüe A/W collection

Interim Nine Months 2020

20

Financial Summary

3Q2020: Strong recovery in operations

 Remarkable execution of store, online and supply chain

 Store sales recovering progressively

 Online sales continue growing at an outstanding pace

 Sales 1-18 October already at high historical level of 2019

 New temporary restrictions in some markets from 19 October

Interim Nine Months 2020

22

3Q2020: Strong recovery in operations

€ million	3Q20	3Q19	20/19	CC
Net sales	6,052	7,000	(14%)	(10%)
Gross profit	3,661	4,254	(14%)	(8%)
EBITDA	1,848	2,255	(18%)	(10%)
Net income	866	1,171	(26%)	(13%)

• Strong recovery in challenging environment
• Active management of supply chain
• Healthy gross margin evolution
• Strong reduction in operating expenses

• Exceptional costs of €135m due to
  Covid-19

Interim Nine Months 2020

23

Sales

€ million	9M20	9M19
Net sales	14,085	19,820

• Strong recovery in sales
• Online sales +75% CC in 9M2020
• 9M2020 sales trends improve as stores reopen and online sustains outstanding progress

Interim Nine Months 2020

24

Gross margin

€ million	9M20	9M19
Gross margin	58.0%	58.2%

• Flexibility of supply chain key to gross margin performance
• CC gross margin +110 bps to 59.3%
• Closing inventory down 11%

Interim Nine Months 2020

25

Operating efficiencies

€ million	9M20	9M19	20/19
Op. expenses	4,812	5,811	(17%)

• Very efficient cost management across all departments and business areas
• Demonstrates our ability to react and adapt continuously to the changing trading environment
• The main components of operating expenses have shown a very good performance

Interim Nine Months 2020

26

Depreciation

€ million	9M20	9M19		20/19
Depreciation	(2,388)	(2,154)	11%

• Depreciation & Amortisation includes completion of space optimisation 2020-2021 booked in 1Q2020

Interim Nine Months 2020

27

Financial results

€ million	9M20		9M19	20/19
Financial results	(107)	(111)	(4%)

• Interest on lease liability amounted to €94m

Interim Nine Months 2020

28

Flexibility of business model key to performance

€ million	9M20	9M19		20/19	 Flexibility of supply chain
					 Single inventory
Inventory	3,067	3,434	(11%)
					 High quality inventory at period end
Receivables	787	843	(7%)
					 Improved working capital dynamics
Payables	(6,842)	(7,517)	(9%)
Op. working capital	(2,988)	(3,240)	(8%)

Interim Nine Months 2020

29

Outstanding operating performance

 Efficiencies from single inventory position

 Technology enabled by RFID & SINT. Fully rolled out by 2020

 Store optimisation improves inventory allocation

 In-store inventory to fulfill online orders

 Higher product availability and full price sales

 Strong cash generation

Interim Nine Months 2020

30

Strong cash flow and financial condition

€ million	9M20	9M19	20/19	 Strong cash generation
				 Net cash grew €1.8bn in 3Q vs 2Q20
Net Cash Position	8,265	7,734	7%

closing balance

 Net cash reached historic highs

Interim Nine Months 2020

31

Concepts

Store & Online sales by concept

Sales

Pull&Bear

Zara

Massimo Dutti

Bershka

Stradivarius

&	Oysho
Zara Home	Uterqüe

Interim Nine Months 2020

33

Performance per concept

Oysho

		Uterqüe	Bershka	Stradivarius
Group average	Massimo	Pull&Bear
	Dutti

Interim Nine Months 2020

34

Performance per concept

• Remarkable online growth across all concepts
• Strong performance at Oysho and Zara Home ranges
• Optimisation activity in all concepts

Interim Nine Months 2020

35

Outlook

Sustainability & Circular economy a key part of the strategy

 Sustainability in supply chain

 Renewable energies

 Sustainable fabrics

 Eco-efficient stores

 Zero-waste / recycling

Interim Nine Months 2020

37

Sustainability & Circular economy 2020 targets

Objective	2020
100% eco-efficient stores	✓
100% stores w. containers for used garments	✓

More than 25% of Join Life garments	>30%
100% certified forest friendly fibers	✓
Removal of plastic bags in all concepts	✓
Zero discharge commitment	✓

Interim Nine Months 2020

38

Online launch in Costa Rica, Guatemala, Honduras & Nicaragua

Interim Nine Months 2020

39

Global online developments

2007	2010	2011-2014	2019	2020	2021e	2022e
Zara Home	Zara launch	Zara launch in USA,	Global presence	Zara new	Inditex	Online >25%
launch all over	all over	China, Japan, Russia	14% of group	studios	Open	of group sales
Europe	Europe		64,000 m2	Platform
All concepts in Europe	sales
		All key markets covered

Interim Nine Months 2020

40

Integrated digital eco-efficient stores

Beijing Wangfujing

Interim Nine Months 2020

41

Integrated digital eco-efficient stores

London Bluewater

Interim Nine Months 2020

42

4Q2020: Stores in operation

Interim Nine Months 2020

43

FY2020 outlook

• November sales affected by new phase of closures and restrictions in various markets
• Most markets reopened over the 1st week of December. Improvement in store sales
• Currently 8% of stores are closed with an additional 10% closed on weekends
• Significant number of stores with restrictions on space, capacity and opening hours
• Outstanding online growth continues at same rate as in 9M2020

Interim Nine Months 2020

44

Dividend

• FY2019 dividend of 35 cents per share paid on 2 November 2020
• Inditex's dividend policy of 60% ordinary payout and bonus dividends remains in place
• The remainder of the bonus dividend (78 cents per share) will be paid between FY2021 and FY2022
• Dividend payments to be made biannually in May and November as normal

Interim Nine Months 2020

45

FY2020 Results

• Results for FY2020 to be released on 10 March 2021

Interim Nine Months 2020

46

Interim

Nine

Months

2020

15 December 2020