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%
- bn
- bn
Online sales €
- bn
- bn
- bn
- bn
- 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
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Disclaimer
INDITEX - Industria de Diseño Textil SA published this content on 15 December 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 15 December 2020 08:32:04 UTC