Inditex earns 1,272 million in the first half of the year after a record second quarter

An employee places clothes in a Zara store that opened in Beijing last April.

The textile group Inditex earned 1,272 million euros in the first half of its current fiscal year, which started last February, compared to losses of 195 million in the same period last year. Thus, between that February and July 2021, the head of brands such as Zara or Massimo Dutti obtained revenues of 11,936 million. This means that the company's sales are not only well above those of 2020, the year hardest hit by the coronavirus crisis, but also 2019, before the pandemic. In the presentation of the results of the first quarter, Inditex already indicated that in the first five weeks of the second (that is, during May and the beginning of June) its turnover was 5% higher than that of 2019. Finally, in the entire period ( May to July), sales have been 7% above 2019.And the group warns that at the beginning of its second semester (specifically from August 1 to September 9), sales have been 9% higher than two years ago.

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• Inditex accelerates its integrated inventory management to boost internet sales

The figures presented this Wednesday before the National Securities Market Commission (CNMV) thus confirm that the recovery is gaining body for the multinational based in Arteixo (A Coruña). The textile giant founded by Amancio Ortega, the richest man in Spain, dispels the doubts that the advance of the delta variant of the coronavirus had placed on the summer campaign. Its sales level, according to the statement sent to the CNMV, "has been progressively accelerating" during a second quarter in which "sales, ebitda [gross operating profit] and net profit reached a historical maximum". Specifically, sales from May to July reached a value of 6,993 million, with net profits of 850 million, the best second quarter of the group in its almost four decades of history (the Zara brand is older).

Much of this is due to the growing digitization of the company, whose internet sales in the first half grew by 36% compared to last year. If compared to 2019, what the online business generates is already more than double (137% more than in its first fiscal semester two years ago). The company points out that the migration to the Inditex Open Platform, the proprietary technological platform on which a large part of its digital strategy depends, has already advanced to 95%. Last July it announced that it had completed the integration of inventories, another of the pillars of its digital strategy, since it allows to serve from physical stores what is sold through the network.

Back to the results of the first fiscal semester, Inditex declares an ebitda (the profit obtained before the payment of taxes and other costs) of 3,101 million, 109% more than in the first part of the previous year.

Operating expenses grew 25% compared to a year earlier, a logical result of the evolution of the pandemic, since for much of 2020 many of its stores were closed, while it currently maintains 99% of them open.

In parallel, the cash position increased by 24% to reach 8,023 million at the end of the first half of the current year, very close to the record of 8,060 million at the end of 2019. The group maintains its intention to pay 0.35 euros per share , the second half of your 2020 dividend, on November 2.

6,654 stores

Among its seven brands (Zara, Massimo Dutti, Pull & Bear, Bershka, Stradivarius, Oysho, Uterqüe), Inditex had 6,654 stores worldwide at the end of July (more than 200 markets are present), 683 less than 12 months before and 175 less than at the start of the year. The closure of physical stores is also part of the digital strategy and, according to the Inditex executive president, Pablo Isla, last March, it would affect some 400 establishments during 2021. This also implies the reform of some spaces and the opening of new ones ( in the first half, for example, 92 new stores were opened). These figures also include Zara's children's fashion and home textiles divisions (with different stores in many cases),while Uterqüe (accessories) will be integrated into Massimo Dutti over the next year and its items will no longer be sold in differentiated stores. In the conference with analysts, Isla explained that this step will give "visibility" to the brand, which will be sold in some selected Massimo Dutti stores and globally through its website (it currently has 92 of its own stores in 14 countries, according to its Web).

The textile giant maintains the sustainability commitments approved by its last general meeting of shareholders, held in July, which included an advance until 2040 (previously there was a deadline until 2050) of the objective of becoming an emissions-neutral company. Other goals that have been proposed are to use 100% renewable energy next year or reduce water consumption in the supply chain by 25% by 2025. Environmental objectives also include the use of more sustainable fibers and materials in coming years.