Zara’s parent company, Inditex, saw its first-quarter sales grow 15% to €7.6bn, ignoring the impact of exchange rates. This represents growth across all geographies and brands.
Operating profit rose 43% to €1.5bn as sales growth outpaced rising operating costs.
The net cash position, including lease liabilities, improved from €3.4bn to €5.0bn due to better operating performance.
In the first month of Q2, sales were up 16% on the same period last year. Full-year gross margin is expected to remain stable at around 60%. The optimisation of stores is ongoing, with gross space expected to grow 3% during the year, despite fewer open stores.
The group plans to pay the remaining €0.60 of the full-year dividend on 2 November 2023, bringing the total to €1.20.
The shares rose 3.9% following the announcement.
Aarin Chiekrie, equity analyst at Hargreaves Lansdown:
“Zara’s parent company, Inditex, has had an impressive start to the year. Inditex owns other fashion favourites like Pull&Bear, Bershka, and Stradivarius – all of which have seen an uptick in sales as consumers flocked to pick up the group’s Spring/Summer collections. Double-digit sales growth has outstripped rising costs and helped to keep margins and cash balances healthy. And the group’s optimisation strategy, which prioritises closing smaller stores and focusing on bigger ones in prime locations, is playing its part too.
Despite the stellar performance, it’s worth noting Inditex’s fashion has a relatively high price point compared to other high-street fashion chains. If inflation remains sticky at the current high levels, Inditex could see consumers’ demand for the latest fashion take a back seat as the cost-of-living pressures mount.”
