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Solid growth, but at a slower pace than investors are used to. Under the pressure of breaking records every quarter with its business results, Spanish fashion giant Inditex has announced a profit of 1.29 billion euros in its first fiscal quarter, up 10.8%, with sales up 7.1% to 8.15 billion, the first time since 2019, excluding the pandemic, the company has not achieved double-digit growth. In the same period last year, growth exceeded 13%.
Analysts have been warning for weeks of this possibility, given a slowdown in demand which, however, seemed to be picking up pace in the new year. Amancio Ortega's company shows that between 1 May and 3 June, the spring/summer collection has grown in sales by 12% compared to the same period a year ago.
What's more, despite the slowdown in the first quarter, the reality is that the company continues to grow, with record profits and sales. In fact, its gross margin has continued to rise to 4,940, up 7.3%, thanks to tight cost control and, above all, the reduction of freight and raw material derivatives.
The company has continued to open shops in recent months. In fact, it has undertaken openings in 28 markets, opening its first shops in Uzbekistan in February. The period has also been marked by Inditex's return to Ukraine, where 48 shops have already reopened, after having left this market after the start of the war. In total, and at the end of the first quarter, the company operated 5,698 shops.
Inditex has also taken the opportunity to present some changes to its board of directors, which will be approved at the general shareholders' meeting called for 9 July. Among the most noteworthy, the incorporation of Belén Romana to the highest governing body as an independent director, replacing Anne Lange.
The board of directors will also propose to the shareholders to reduce the term of office of the new directors to two years. Romana was chairwoman of Sareb and has been a director of Banco Santander since 2015. She was director general of economic policy and director general of the treasury of the ministry of economy of the Spanish government, as well as a director of the Bank of Spain and the CNMV. She also held the position of director of the Instituto de Crédito Oficial and other entities on behalf of the ministry of economy.
Following the release of the results, the market reaction has been swift, with some analysts such as Barclays indicating that, despite the slowdown in sales, the accounts have been above expectations.
The company's shares soared nearly 5% to 46 dollars per share, boosting its year-to-date appreciation to 18% and approaching the all-time high of 47 euros per share reached in March.
At that time, Inditex had already presented record results for the end of fiscal year 2023, with a profit of 5.38 billion, 30.3% more than the previous year, in the face of fears about the impact of inflation on consumers' purchasing power and geopolitical turbulence in some of its markets.
The barrier, that of 5 billion euros per year, was only surpassed last year by two other Ibex companies (Santander and BBVA), so the challenge to repeat the feat is enormous.
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