Share Prices & Company Research

Market News

15 Sep 2021 | 11:45

Inditex back in fashion as sales soar

(Sharecast News) - Inditex saw sales bounce back in the first half, the owner of Zara said on Wednesday, helping profits hit "historic highs". Sales in at the Spanish retail giant jumped 49% in the six months to 31 July to €11.94bn, while the net profit was €1.27bn against last year's first-half loss of €195m.

Earnings before interest, tax, deductibles and amortisation surged 109% to reach €3.1bn,

Inditex said both profits and cash - which stood at €8bn as at July 2021 - had reached "historic highs" during the period. Executive chairman Pablo Isla added that Inditex was "reaping the benefits of the strategic and sustainable transformation in our unique business model".

The world's largest retailer, which also owns Massimo Dutti, Pull & Bear and Bershka, was hit hard after the pandemic shuttered its stores. The group currently has more 6,800 outlets in 96 markets worldwide, and trading hours remained down by 15% in the first half, due to store closures, capacity restrictions and other Covid-related limitations.

Online sales continued to strengthen, however, and they are now expected to account for more than 25% of total sales in the current year. Online sales grew by 36% year-on-year in the first half, or by 137% when compared to the same period in 2019.

Updating on current trading, Inditex said store and online sales in local currencies between 1 August and 9 September were ahead 22% on the same period in 2020 or 9% against 2019.

Harry Barnick, senior analyst at research firm Third Bridge, said: "Inditex is emerging as a winner in the post-Covid retail world.

"Gross margins continue to be resilient, due to reduced discounting. Inditex has benefited from relatively modest stock levels as it successfully cancelled orders with suppliers to avoid heavy discounting during the end of season sales.

"The group is in the process of rationalising its retail estate, consolidating smaller stores into larger flagships. This could lead to a slight dip in offline retail sales. However, Inditex will hope this is offset by growth in its online channel and improved profitability due to leaner costs."

As at 1130 BST, shares in Inditex were down 2%. Founder Amancio Ortega controls the group with a 59% stake.
Get in touch today
Join Redmayne Bentley
Talk to us now about opening a new account or transferring your account from another provider
0113 243 6941
Get in touch today
Contact your local office
Contact your local office to find out more
The value of your investments and the income from them may go down as well as up, and you could get back less than you invested.
We use cookies on this site to improve your experience and help us provide you with a better website. An explanation of the cookies we use and their purpose can be found within our Cookie Policy. Your continued use of this site means you consent to the use of cookies.