Inditex: strong performance in Q1 of fiscal year 2020-2021

  •   02/07/2021 - 08h08
  •   DEHOUI Lionel

The Inditex group is the current world leader in the field of ready-to-wear clothing. It is also the parent company of the Zara clothing chain. Its 2020-2021 financial year ended in late January with a net profit of 1.1 billion euros. The annual turnover for these twelve months was down 28% to 20.4 billion euros. After this fiscal year, the group follows up with a very good performance in the first quarter of 2021.

Inditex: strong performance in Q1 of fiscal year 2020-2021

A better than expected first quarter of 2021 (February to April 2021)

The Spanish retail giant "Inditex" generated a net profit of 421 million euros in the first quarter. This performance is well above market expectations for the group in this period. Nevertheless, it is a performance below the levels before the health crisis by a third. Some analysts were expecting 359.29 million euros as the group's net profit.

Inditex's sales grew by a healthy 50% (56% in local currencies) in the first quarter of the new 2021-2022 financial year. Its sales amounted to 4.9 billion euros with a 67% growth in online sales over the period in local currencies. In line with this, the group's various brands and geographical areas recorded strong sales growth.

All in all, Inditex's sales fell by 11.5% compared to its level in Q1/2019 despite the unavailability of 24% of trading hours. A situation caused by the restrictive measures.

 

Some performance indicators at the end of April 2021

The performance of the company that owns Zara was particularly marked by a 152 basis point increase in gross margin (+59.9%). 2.96 billion and was higher than in Q1/2020 (+58.4%) and Q1/2019 (+47 basis points). The increase in operating expenses (+19%) confirms the company's solid operating performance in Q1.

The business posted Ebitda of €1.2 billion at the end of April 2021 compared to €484 million at the end of the first quarter of the 2020/21 financial year. EBIT was €569 million compared to a loss of €508 million at the end of April 2020.

The result of the Group's strong quarterly results is a net cash position of €7.2 billion at the end of April 2021. 7.2 billion at the end of April 2021, an increase of 25% compared to the previous year.

 

Second quarter already showing strong growth

The second quarter looks promising, with 98% of Inditex Group stores opening by 7 June 2021. From May 1 to June 6, the Group's sales (both in-store and online) increased significantly. Growth was 102% compared to the same period in 2020 versus 5% in 2019.

This encouraging start to the second quarter was only possible thanks to the popularity of the spring collections. Restrictive measures caused 10% of trading hours to be unavailable.

In other news, Inditex Group's annual general meeting will be held on July 13. Shareholders will have to approve the 0.70 euro dividend proposed by the Board of Directors for the profits of the year ending January 2021.