Inditex, the owner of brands including Zara, Bershka and Pull & Bear, attributed increased sales during (H1) to a strong execution of its business model.

  • Sales reached EUR14.8bn (US$14.79bn), 24.5% higher than H1 2021.
  • Gross profit increased 24.5% to EUR8.6bn.
  • Gross margin reached 57.9%, the highest in seven years.
  • EBITDA increased 30% to EUR4bn
  • Net income increased 41% to EUR1.8bn

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”

Inditex says it is expecting supply chain tensions to surface in the second half and has moved to temporarily accelerate autumn/winter inflows in order to increase product availability without any change to commitment levels. Inventory as of 31 July increased 43% on this basis.

Analyst reaction to Inditex H1

Commenting on the results, GlobalData apparel analyst Darcey Jupp, says: “Inditex has once again proven itself to be an inimitable force in the global apparel market, with its group net sales up EUR2.9bn to EUR14.8bn in H1 FY2022/23 and 15.8% up versus pre-pandemic despite various macroeconomic challenges. Inditex’s clear focus on enhancing product ranges and customer experience is paying off, as it experienced a significant increase in store traffic during H1.

“However, with Europe accounting for around 60% of its sales, and energy prices in the region remaining at unprecedented levels, Inditex should brace for a downturn in demand in Q4 with a bleak winter ahead,” she warns.

“While it did not provide figures for online performance, Inditex has reported that the channel returned to growth in Q2 after a 6% decline in Q1 against high lockdown comparatives. The charge on postal returns for Zara in the UK does not seem to have been expanded yet, which is wise considering 82.6% of existing Zara shoppers in GlobalData’s UK monthly survey in June said the fee would make them reconsider shopping for Zara online.

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“During the first half of the year, Inditex has furthered its push to become a more sustainable company, and it believes it is currently on track to meet its targets set for 2022, 2023 and 2025. Recently, it partnered with CIRC, a start-up that is creating new technology to better recycle cotton and polyester and convert them into more sustainable textiles such as viscose and lyocell. Incorporating more of these materials in its ranges will help attract the growing number of consumers looking to purchase more sustainable apparel, but it must ensure that usage is widespread and not through a standalone eco collection to have significant effect. Introducing clothing recycling points in its stores would help Inditex benefit from this partnership further, as it could offer incentives like vouchers to encourage repeat spend, like rival H&M has already incorporated across its brands.”

Inditex outlook

“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 group said.

“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.”

  • At current exchange rates Inditex expects a +0.5% currency impact on sales in FY2022.
  • Online sales are expected to exceed 30% of total sales by 2024.
  • In 2022, Inditex expects a stable gross margin (+/-50 bps).
  • Investments in 2022 are expected to sit at around EUR1.1bn

Earlier this year, Inditex contributed to a US$30m funding round to help circular fashion company, Circ, expand its poly-cotton recycler designed to recycle clothing and eliminate clothing waste.