Inditex soars 4.5% despite posting half-year results with more moderate growth

With a capitalisation of 150.78 billion euros, the largest share within the Ibex 35

September 11 () –

Shares of Inditex, the most valuable company in the Ibex 35, rose 4.54% on Wednesday after achieving new records with its first-half results, although with more moderate growth, as analysts had predicted.

According to market data consulted by Europa Press, the textile giant has recorded its second best result of the session with the aforementioned rise of 4.54%, placing the price of its shares at 48.38 euros.

Inditex has gained 22.7% so far this year, while its market capitalisation has reached 150.78 billion euros, the largest share in the Ibex 35.

Despite today’s rise, Inditex shares have remained a long way from the historic highs reached on August 23, when the stock closed at 49.4 euros.

Specifically, Inditex recorded a net profit of 2.768 billion euros during the first half of its fiscal year 2024-2025 (between February 1 and July 31), which represents an increase of 10.1% compared to the same period a year earlier, the company reported on Wednesday.

Sales also grew by 7.2% to €18.065 billion, with a “very satisfactory” performance both in-store and online and “positive” in all formats, while sales at constant exchange rates grew by 10.2%.

Gross operating profit (EBITDA) grew by 8.1% to €5.04 billion, while net operating profit (EBIT) grew by 11.9% to €3.541 billion and pre-tax profit grew by 10.6% to €3.598 billion.

Gross margin grew by 7.5% to €10.541 billion and stood at 58.3% of sales, 19 basis points higher than the first half of the previous year.

“The design and quality of our fashion offering and the experience we offer our customers are, together with the efficiency and increasing sustainability of our operations, the keys to the solidity of these results. Our fully integrated model continues to generate opportunities for profitable growth in all concepts, regions and channels,” said Inditex CEO Oscar García Maceiras.

The company also stressed that the autumn/winter campaign collections have been “very well received” by its customers.

Thus, in-store and online sales at constant exchange rates between August 1 and September 8, 2024 have grown by 11% compared to the same period in 2023.

In its first half of the year, the company has opened stores in 34 markets and at the end of the period, Inditex operated 5,667 stores.

Inditex has highlighted that all expenditure lines have shown a favourable evolution.

Operating expenses grew 6.8%, below sales growth, and including all lease charges, 102 basis points below sales growth.

The group founded by Amancio Ortega also highlighted that its good operational performance has been reflected in a “strong” generation of funds.

Cash flows before income tax payments amounted to €4.356 billion in the first half of the year, up 9%.

Due to temporary differences in tax refunds for corporate income taxes, the flows generated amounted to 3,527 million euros.

The net financial position grew by 3.5% to €10.911 billion at the end of the first fiscal half of the year.

Due to strong operating performance, inventory decreased 1.7% as of July 31, 2024 compared to the same date last year.

The company will pay the final dividend for the 2023 financial year (0.77 euros per share) on 4 November.

GROWTH OPPORTUNITIES

Inditex has assured that it continues to see “great opportunities for growth” and, in this regard, has indicated that its priorities are “the continuous improvement of its fashion proposal; the optimization of the customer experience; progress in sustainability; and the preservation of the talent and commitment of its people.”

“Maintaining these priorities will drive long-term growth,” the company said, adding that in order to take its business model to the next level and “further” expand its differentiation, it is developing a series of initiatives in all key areas for the coming years.

“The creativity of our teams and the flexibility of our business model, together with the provisioning in proximity during the campaign, allows for a rapid reaction to customer demands.

The result is a unique market positioning, which provides our business model with great growth potential,” he said.

Inditex is present in 214 markets, with a low market share in each of them and in a highly fragmented sector, so the company sees “strong growth opportunities.”

Inditex expects annual gross space growth in the 2024-2026 period to be around 5%, while estimating a positive contribution of space to annual sales in that period, in conjunction with a “strong” development of online sales.

“The store optimization process is an ongoing task,” added the firm, which, at current exchange rates, expects a currency impact of -3.0% on sales in 2024 and a stable gross margin (+/-50 basis points) this year.

In the current year, the company is making investments to increase operational capacity, achieve efficiencies and increase differentiation to a higher level, objectives to which it estimates to allocate around 1.8 billion euros in 2024.

Given the “significant” opportunities for future growth, Inditex is implementing a logistics expansion plan for 2024 and 2025.

This extraordinary two-year investment programme focused on business expansion allocates 900 million euros to increase logistics capacity in each of the years 2024 and 2025.