Fashnopsis:
- Inditex reported a strong Q1 with 7.1% sales growth to €8.2 billion, owing to robust spring/summer collections.
- Global expansion continues as Inditex opened stores in 28 new markets during Q1.
- Net profit jumped 11% to €1.29 billion, reflecting the company’s financial strength.
- Inditex forecasts future net sales growth between 6% and 7%, indicating continued momentum.
- Board changes are proposed to ensure a balance of experience and fresh perspectives for future company direction.
Strong Sales Growth & Profitability
Inditex, the fashion powerhouse behind Zara and other popular brands, delivered a robust performance in Q1 2024. Sales growth of 7.1% translated to €8.2 billion, showcasing healthy customer demand. Notably, adjusting for currency fluctuations, sales rose by an even stronger 10.6%, highlighting the company’s resilience in a global market.
Profitability remained positive, with a 7.3% increase in gross profit reaching €4.9 billion. Inditex also managed to maintain a healthy gross margin of 60.6%, demonstrating efficient operations. Earnings metrics were equally encouraging, with EBITDA climbing 8% to €2.4 billion and EBIT rising 10.3% to €1.6 billion. Net income continued the upward trend, posting a 10.8% increase to €1.3 billion.
Customer Engagement and Global Reach
Inditex’s commitment to high-quality fashion resonated with customers. The company reported a positive reception for its spring/summer collections, resulting in a 12% increase in store and online sales (adjusted for currency) during the early weeks of Q2 compared to the same period in 2023. This strong customer response signifies Inditex’s ability to stay current with trends and cater to diverse preferences.
Expansion remains a key strategy for Inditex. The company opened stores in 28 new markets during Q1, demonstrating its dedication to reaching a wider global audience. Furthermore, the reopening of 19 stores and the resumption of online operations in Ukraine highlight Inditex’s commitment to supporting customers in a challenging region.
Inditex Supplier Payments Rise 15.5% in Q1 2024
Inditex’s accounts payable, representing its obligations to suppliers, increased by 15.5% in Q1 2024. This rise, from €1.4 billion to €1.61 billion (€1.4 billion x 1.155), reflects a higher level of outstanding payments to suppliers.
Looking Forward
Inditex anticipates continued growth through retail expansion, coupled with a projected strong performance in online sales. However, the company acknowledges a potential negative impact on sales in 2024 due to currency fluctuations. Despite this, Inditex remains confident, projecting a stable gross margin.
The upcoming Annual General Meeting (AGM) will see the Inditex board propose a dividend of €1.54 per share for FY2023. Additionally, the company plans to renew and appoint several board members, ensuring a mix of experience and fresh perspectives to guide Inditex’s future.
In conclusion, Inditex’s Q1 2024 performance paints a picture of a financially strong and forward-thinking company. With a focus on customer engagement, global expansion, and a commitment to profitability, Inditex is well-positioned for continued success in the dynamic fashion industry.
Image Source: Inditex
