Marta Ortega debuts at Inditex with record results despite provisioning 216 million for the war in Ukraine

The Inditex group, owner of brands such as Zara, Massimo Dutti, Bershka and Oysho, presented the first results this Wednesday with Marta Ortega as president.

The company recorded sales of 6,742 million euros in its first fiscal quarter (from February to April), 36% more than in the same period last year and above the record of 2019 (5,927 million).

Net profit grew by 80%, to 760 million, also higher than the maximum of 734 million from the year before the pandemic, despite the fact that the group had to provision 216 million due to the impact of the war.

Inditex shares rose more than 5% this morning, leading the rise of the Ibex 35, to 23.39 euros, after the publication of the results.

Although the first quarter is usually the weakest period in sales, it is an important moment to measure the resistance of the group, whose activity in Russia was paralyzed since March 5 due to the invasion of Ukraine.

In addition, these are the first results with Óscar García Maceiras with full executive powers as CEO, after the departure of Pablo Isla from the company on April 1, and the effective arrival at the non-executive presidency of Ortega, daughter of the main shareholder and founder, Amancio Ortega.

The impact of the lockdown in Russia and Ukraine

To face the closure of stores in Russia and Ukraine, from March 5 and February 24, respectively, the group has made this extraordinary charge of 216 million in the accounts of the first quarter, "corresponding to all expenses derived from the situation ” due to the cessation of activity in those markets, according to a statement.

Net profit without this effect would have been 940 million.

In 2021, Russia was the second market in which stores generated the most profits, only behind Spain.

It accounted for 8.5% of the net operating result.

Business growth was "robust" across all geographies, the company said in a statement.

With some exceptions, such as the case of Ukraine and Russia, and also China, where 67 stores have been subject to closures related to covid-19.

The United States continues to grow "remarkably" and consolidates itself as the group's second largest market.

The company says it has seen a strong recovery in store traffic, a possible sign that escalating inflation is not having a perceptible impact on Inditex's accounts.

sales

were 6% lower, although the company attributes this to the fact that it is a stabilization effect after the extraordinary increase of 67% registered in the first quarter of last fiscal year.

Internet commerce is expected to exceed 30% of total turnover in 2024.

On possible price increases, the CEO has assured in a conference with analysts that the price policy is stable and they do not expect "major changes".

But he has admitted price hikes to "protect the margin."

The operating result (Ebitda) grew by 55%, to 1,917 million euros.

The gross margin on sales was 60.1%, the highest in ten years.

The cash generation capacity grew by 28%, bringing the net financial position to 9,189 million.

Inditex has advanced that, between May 1 and June 5, already in the second quarter, sales in stores and

have grown by 17% over the record period of 2021. Currently 90% of stores are open.

fewer stores

The group chaired by Marta Ortega is immersed in a process of change to reinforce the integration of the

business with that of physical stores, which it considers must be increasingly connected, while the least profitable and small establishments are closed to promote the big ones, which also provide services to digital sales.

Last April, Inditex had 6,423 stores, 5% more than in the same period last year.

The brand that has reduced the number of stores the most is Massimo Dutti, with 117 fewer (-15%), down to 663. It is followed by Zara, with 3% less (-60 stores), down to 1,947, and especially due to the lower number of Zara Home (10% less, up to 471).

Pull&Bear remains at 870 and Oysho loses 45 stores, up to 553 (7.2% less).

The Inditex shareholders' meeting will be held on July 12.

In it, the Board of Directors will propose a total dividend corresponding to the 2022 financial year of 0.93 euros per share.

Of that figure, 0.465 euros have been paid on May 2, and the rest will be disbursed on November 2.