Inditex ignited by post-containment dress frenzy
Spanish fast-fashion giant Inditex (ITX.MC) said sales in May and so far in June were twice as high as in the same period last year, with customers making purchases. splash on shopping sprees after lockdown.
The strong May 1-June 6 sales for the owner of brands such as Zara, Bershka and Stradivarius came despite stores operating 10% fewer trading hours due to limitations linked to the pandemic.
“Week after week, we are seeing a pickup in store traffic,” President Pablo Isla said on a conference call, adding, “We are seeing a gradual recovery.”
The post-foreclosure spike reflected results from rivals such as Next (NXT.L) and Abercrombie & Fitch Co. (ANF.N), although some industry analysts predicted the rise could be temporary as rates d High savings could dampen spending.
Data from national statistics agencies showed retail sales in Europe, China and the United States surged in March, but stagnated in April as a boom in activity after restrictions were eased was hampered by rising prices and uncertainty over COVID-19.
Inditex saw a two-thirds increase in online sales in the first quarter compared to the same period in 2020, with in-store traffic also on the rise as COVID-19 restrictions in key markets like Great Britain Brittany, Germany and France have been relaxed.
Isla did not give an estimate of how he expected online sales to evolve as stores fully open, instead pointing to the long-term balance between online and in-store.
“You can’t expect these growth rates for the full year online. We strongly believe in this fully integrated cross-store and online approach much more than focusing on the specific growth rate of one of two areas, ”he said.
Inditex, which announced in June last year its intention to close hundreds of stores, currently operates 6,758 stores worldwide, up from 7,412 last April.
PROFIT BEATS FORECAST
Inditex’s net profit for its first quarter period from February to April was better than expected at 421 million euros ($ 513 million), but still down from last year’s fourth quarter profit and a third below pre-pandemic levels.
Earnings before interest, taxes, depreciation and amortization (EBITDA) fell 27% from 2019, but Inditex exceeded the expectations of analysts polled by Refinitiv, who estimated net profit of 359.29 million euros and an EBITDA of 1.17 billion euros.
While revenue for the quarter reached 4.9 billion euros, 48% more than the same period in 2020 when Inditex recorded its very first quarterly loss, it was still well below 2019 .
Shares of Inditex, which this month returned to February 2020 levels for the first time since the start of the pandemic, edged down to € 31.67 at 1058 GMT.
Inditex said its inventory tagging system has helped keep inventory 5% below 2019 levels and a high gross margin of 59.9%, allowing it to sell almost all items at full price, a declared Isla.
($ 1 = 0.8205 euros)
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