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4-Traders Homepage  >  Equities  >  Bolsa de Madrid  >  Inditex - Industria de Diseño Textil    ITX   ES0148396007

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Inditex Industria de Diseño Textil : Zara owner Inditex boosts profitability despite strong euro

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06/13/2018 | 10:29am EDT
FILE PHOTO: People walk in front of an advertisement for an Inditex owned Zara store in Milan

MADRID (Reuters) - Inditex, the world's biggest clothing retailer and owner of fashion brand Zara, reported improved profitability on Wednesday for the first three months of its financial year despite the dampening impact of a strong euro.

However, sales in the first quarter were weighed down by negative currency effects and unseasonably cold weather in Europe meaning the quarterly growth rate was a mere 2 percent, lower than rates booked during the financial crisis.

Sales for the first six weeks of the second quarter were more robust, up 9 percent in local currencies, as shoppers snapped up items from summer collections including striped maxi skirts and linen dresses at Zara.

Shares initially slipped on disappointment over the weak first quarter sales growth, but later rebounded to change hands 3.7 percent higher and lead the gainers on Spain's blue-chip index <.IBEX> in afternoon trade.

Stripping out that negative currency impact, first-quarter sales growth was 7 percent. The gross margin increased from the year-ago period, despite many analysts forecasting a fall, coming in at 58.9 percent of total sales.

A strong euro can act as a drag on profitability for Inditex, the owner of upmarket chain Massimo Dutti and underwear store Oysho.

The group, controlled by founder Amancio Ortega, generates more than half of its sales in currencies other than the euro and then books those sales in euros when reporting results.

Inditex's centralised sourcing and distribution model also means a large chunk of its costs are in euros.

First-quarter earnings before interest, tax, depreciation and amortisation were 1.13 billion euros, in line with analysts' expectations.

The company opened new stores in 36 markets and launched online sales in Australia and New Zealand during the period. However, the number of net stores declined over the three months to 7,448 as the company closed smaller shops to focus on big destination-style stores that complement its online offering.

(Reporting By Sonya Dowsett; Editing by Biju Dwarakanath/Keith Weir)

By Sonya Dowsett

Stocks mentioned in the article
ChangeLast1st jan.
IBEX 35 -0.14% 9755.4 End-of-day quote.-1.92%
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Financials (€)
Sales 2019 27 165 M
EBIT 2019 4 536 M
Net income 2019 3 541 M
Finance 2019 6 924 M
Yield 2019 2,65%
P/E ratio 2019 26,08
P/E ratio 2020 23,60
EV / Sales 2019 3,17x
EV / Sales 2020 2,87x
Capitalization 92 960 M
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Inditex - Industria de Dis Technical Analysis Chart | ITX | ES0148396007 | 4-Traders
Technical analysis trends INDITEX - INDUSTRIA DE DIS
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Income Statement Evolution
Consensus
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Mean consensus OUTPERFORM
Number of Analysts 37
Average target price 31,4 €
Spread / Average Target 6,2%
EPS Revisions
Managers
NameTitle
Pablo Isla Álvarez de Tejera Chairman & Chief Executive Officer
Carlos Crespo González Chief Operating Officer
José Ignacio Fernández Chief Financial Officer
Gabriel Moneo Marina Chief Information Technology Officer
Amancio Ortega Gaona Non-Executive Director
Sector and Competitors
1st jan.Capitalization (M$)
INDITEX - INDUSTRIA DE DISEÑO TEXTIL3.05%108 056
KERING30.28%75 154
FAST RETAILING CO LTD12.79%49 654
ROSS STORES6.09%32 059
ZALANDO5.81%13 711
PRADA S.P.A.32.69%12 433