Spanish clothing firm Inditex registers sales of €14.8 bn in H1 2022

In H1 2022, the execution of the business model was very strong. Gross profit increased 24.5 per cent to €8.6 billion and gross margin reached 57.9 per cent, the highest in 7 years. Based on current information, Inditex expects a stable gross margin (+/-50 bps) for fiscal 2022 (FY22), the company said in its Interim Half Year 2022 Results.

Over H1 2022, Inditex’s traffic and store sales increased markedly and continue to do so, with store differentiation being key to this dynamic. Online sales progressed satisfactorily and were positive in the second quarter (Q2) of 2022. The company expects online sales to exceed 30 per cent of total sales by 2024.

The control of operating expenses has been rigorous. Operating expenses increased by 20 per cent and EBITDA increased 30 per cent to €4 billion. Inditex has provisioned all expected expenses for FY22 in the Russian Federation and Ukraine. An extraordinary charge of €216 million was recorded in Q1 2022 accounts under other results.

The company’s EBIT increased 44 per cent to €2.4 billion and PBT 42 per cent to €2.3 billion. Its net income increased 41 per cent to €1.8 billion. Moreover, due to the strong execution of the business model, cash from operations grew significantly. The net cash position grew 15 per cent to €9.2 billion.

The store and online sales in constant currency for the Autumn/Winter collections between August 1 and September 11, 2022, increased 11 per cent versus the record period in 2021. At current exchange rates Inditex expects a 0.5 per cent currency impact on sales in FY22. Sales for the Spring/Summer collections reached €14.8 billion, increasing by 24.5 per cent. Sales in constant currencies grew 25 per cent.

In H1 2022, openings have been carried out in 24 markets. At the end of the period, Inditex operated 6,370 stores.

Oscar García Maceiras, CEO, 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.”

In the face of possible supply chain tensions going into H2 2022, Inditex has temporarily accelerated Autumn/Winter inventory inflows in order to increase product availability without any change to commitment levels. Due to this reason, inventory as of July 31, 2022, increased 43 per cent. The Autumn/Winter inventory is considered to be of high quality and is consistent with the strong sales trends in previous quarters and the sales performance going into the H2 2022. As of September 11, 2022, inventory levels were 33 per cent higher

Inditex continues to see strong growth opportunities. “Our key priorities are to continually improve the product proposition, to enhance the customer experience, to maintain our focus on sustainability and to preserving the talent and commitment of our people. Prioritising these areas will drive long-term organic growth. The flexibility and responsiveness of the business in conjunction with in-season proximity sourcing allows a rapid reaction to fashion trends and allows us to enjoy a unique market position. Our business model has great growth potential going forward,” the company said.

The future growth of the Group is underpinned by the investment in its stores, the advances made to the online sales channel and the improvements to its logistics platforms with a clear focus on innovation and technology. It estimates investments in 2022 of around €1.1 billion.

Fibre2Fashion News Desk (KD)