Another strong year for Inditex as sales and profits beat inflation

By

Sandra Halliday

Published
Mar 15, 2023

Inditex’s full-year results on Wednesday saw the Spanish retail giant once again showing why it’s such a dominant force in fashion as sales and profits both soared.

And it said its SS23 collections “have been very well received by our customers”. Store and online sales in constant currency between 1 February and 13 March have risen 13.5% year on year, or 17.5% adjusting for closed operations in the Russian Federation and Ukraine, which is good news after it raised prices by 5% earlier this spring.

As for last year, it posted a 27% net profit rise to €4.1 billion on the back of sales beating pre-pandemic levels. Store and online sales rose 17.5% to €32.6 billion, which was also 15% higher than in 2019.

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So its sales and profit rises are beating shop price inflation and looking at last year in more detail, sales were “positive in all key geographical areas, both in stores and online and in all concepts”.

It’s particularly important that “traffic and store sales increased markedly and continue to do so”, while online sales also grew “satisfactorily over the 2021 record figure”, up 4% to reach €7.8 billion.

Gross profit increased 17% to €18.6 billion and the gross margin reached 57% with the control of operating expenses having been “rigorous”. Operating expenses increased only 15%, which was below the sales growth figure.

The company said EBITDA increased 20% to €8.6 billion and EBIT 29% to €5.5 billion. Pre-tax profit rose 28% to €5.4 billion.

This all came on the back of well received collections and despite disruption such as the firm ceasing operations in 514 stores and online platforms in the Russian Federation on 5 March 2022. Some 82 stores and online operations in Ukraine also remain closed since 24 February 2022.

Inditex added that its 23% store sales rise was achieved with 10% fewer stores and 6% less commercial space than in 2021. Its ongoing store optimisation and digitalisation programme “continues to be key”.

Excluding the space closed in the Russian Federation net space growth was 1% and during the year it opened stores in 33 markets with 201 openings, 186 refurbishments which include 94 enlargements and 349 absorptions. At the end of FY22 it operated 5,815 stores. 

By concept, it said Zara (including Zara Home) sales jumped 21%, Pull & Bear lifted by a healthy 15%, Massimo Dutti rose 4%, Bershka rose 10%, Stradivarius was up 13%, and Oysho 4%.

The group added that it operates in 213 markets “with low share in a highly fragmented sector and we see strong growth opportunities”. It expects increased sales productivity in its stores going forward while the growth of gross space in 2023 will be around 3%.