Inditex earns 1,272 million in the first half of the year after a record second quarter
An employee places clothes in a Zara store that opened in Beijing last April.REUTERS

The textile group Inditex earned 1,272 million euros in the first half of its current fiscal year, which started last February, compared to losses of 195 million in the same period last year. Thus, between that February and July 2021, the head of brands such as Zara or Massimo Dutti obtained revenues of 11,936 million. This means that the company’s sales are not only well above those of 2020, the year hardest hit by the coronavirus crisis, but also 2019. In the presentation of results for the first quarter, Inditex already indicated that in the five first weeks of the second (that is, during May and the beginning of June) its turnover was 5% higher than that of 2019. Finally, throughout the period (from May to July), sales have been 7% above those of 2019. And the group warns that at the beginning of its second semester (specifically from August 1 to September 9), sales have been 9% higher than those of two years ago.

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The figures presented this Wednesday before the National Securities Market Commission (CNMV) thus confirm that the recovery is gaining body for a multinational based in Arteixo (A Coruña). The textile giant founded by Amancio Ortega, the richest man in Spain, dispels the doubts that the advance of the delta variant of the coronavirus had placed on the summer campaign. Its sales level, according to the statement sent to the CNMV, “has been progressively accelerating” during a second quarter in which “sales, ebitda [resultado bruto de explotación] and net profit reach an all-time high ”. Specifically, sales from May to July reached a value of 6,993 million, with net profits of 850 million, the best quarterly period of the group in its almost four decades of history (the Zara brand is older).

Much of this is due to the growing digitization of the company, whose internet sales in the first half grew by 36% compared to last year. If compared to 2019, what the online business generates is already more than double (137% more than in its first fiscal semester two years ago). The company points out that the migration to the Inditex Open Platform, the proprietary technological platform on which a good part of its digital strategy depends, has already advanced up to 95%. Last July it announced that it had completed the integration of inventories, another of the pillars of its digital strategy since it allows to serve from physical stores what is sold through the network.

Back to the results of the first fiscal semester, Inditex declares an ebitda (the profit obtained before the payment of taxes and other costs) of 3,101 million, 109% more than in the first part of the previous year. Operating expenses grew 25% compared to a year earlier, a logical result of the evolution of the pandemic, since for much of 2020 many of its stores were closed, while it currently maintains 99% open. In parallel, cash generation increased 24% to reach 8,023 million in the first half of the current year. The group maintains its intention to pay the second half of its 2020 interim dividend (0.35 euros per share) on November 2.

6,654 stores

Among its seven brands (Zara, Massimo Dutti, Pull & Bear, Bershka, Stradivarius, Oysho, Uterqüe), Inditex had 6,654 stores worldwide at the end of July (more than 200 markets are present), 683 less than 12 months before and 175 less than at the start of the year. The closure of physical stores is also part of the digital strategy and, according to the Inditex executive president, Pablo Isla, last March, it would affect some 400 establishments during 2021. This also implies the reform of some spaces and the opening of new ones ( in the first half, for example, 92 new stores were opened). These figures also include Zara’s children’s fashion and home textiles divisions (with different establishments in many cases), while Uteqüe (accessories) will be integrated into Massimo Dutti over the next year and its items will no longer be sold in differentiated stores of that brand.

The textile giant maintains the sustainability commitments approved by its last general meeting of shareholders, held in July, which included an advance until 2040 (previously there was a deadline until 2050) of the objective of becoming an emissions-neutral company. Other goals that have been proposed are to use 100% renewable energy next year or reduce water consumption in the supply chain by 25% by 2025. Environmental objectives also include the use of more sustainable fibers and materials in coming years.

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