Inditex’s net income displayed a significant growth of 54%, reaching €1.2bn (US$1.3bn) compared to €760m last year.
The company generated 13% growth in sales during the quarter to reach €7.6bn, showcasing growth in physical stores and online platforms resulting in a 16% increase in online and in-store sales. Inditex‘s spring/summer collections also helped boost sales.
The company’s sales exhibited a positive trend across all geographical areas and concepts, emphasising the wide appeal of their offerings. Inditex also expanded its presence in 17 markets during the first quarter of 2023, resulting in a total of 5,801 operating stores by the end of the period.
Key results from Inditex Q1:
- Operating expenses increased 13%, below sales growth
- Gross profit increased 14% to €4.6bn.
- EBITDA grew by 14% to €2.2bn, reflecting the company’s strong financial performance
- Profit before taxes surged by 52% to €1.5bn
- The company’s net cash position grew by 14% to €10.5bn by the end of the first quarter of 2023, showcasing its financial stability and resilience
Looking ahead, Inditex said it remains optimistic about future growth opportunities. The company plans to elevate its business model to “the next level” and introduce various initiatives in all key areas to further enhance its differentiation in the coming years.
In light of these financial results, Inditex’s board of directors intends to propose a dividend for the fiscal year 2022 of €1.20 per share at the Annual General Meeting.
Inditex’s strong reactivity to fashion trends drives its outperformance
Global Data Analyst Pippa Stephens tells Just Style: “Inditex’s ability to remain top of mind among consumers seeking the latest fashion trends allowed it to continue to outperform in Q1 FY2023/24, with reported global net revenue rising by 12.9% to €7.6bn and operating income surging by 43.4% to €1.5bn. Despite ongoing inflationary pressures in Inditex’s key regions of Europe and the US, the group achieved growth in all markets, demonstrating the desirability of its proposition even in tough economic climates. Its strong performance persisted as it entered Q2, with constant currency revenue between 1 May and 4 June increasing by 16%, bolstered by positive reactions to its spring/summer collections.
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“The group has sensibly been investing in its physical locations, allowing it to better withstand the shift back to stores following the pandemic. During the quarter, Inditex opened 17 new locations, including its first in Cambodia, with the aim to grow its total space by 3% in 2023. Its recent Zara store openings have also been in its new design concept, which features digitised fitting rooms, self-checkout areas and click & collect points, allowing customers to experience a smoother and more convenient shopping journey. While Inditex has not detailed the exact growth of its online operations in Q1, it stated that performance was very satisfactory, with the channel’s proportion of group total sales increasing, highlighting the ongoing strength of its digital proposition despite many consumers increasingly prioritising in-person experiences again following the pandemic.
“Sustainability remains a focus for Inditex, having launched its first collection made from Circ technology fabric, which is produced using recycled textile waste, in April 2023, alongside a €15m investment in the global non-profit environmental organisation Conservation International in March 2023, to help enhance the sustainability of the fashion industry. After initially launching its Zara Pre-Owned resale platform in the UK in November 2022, it plans to expand this to France, Germany and Spain by the end of 2023, signalling the initiative’s success. This will allow it to capitalise even more on the outperformance of the second-hand apparel market and improve its perceptions among the ever-growing number of eco-conscious consumers.”