Inditex “dribbles” inflation, although it sees its sales moderate
Inditex will continue to recover its sales levels despite the weakening macro environment and with a “high and lasting” inflation scenario, according to the forecasts of various analysts for the end of the second fiscal quarter (May-July). The textile giant chaired by Marta Ortega has avoided selective price increases and the management of energy and raw material expenses, although Renta4banco analysts expect a more moderate growth in sales, up to 9.7% more compared to the second quarter of 2021.
This analysis forecasts that the results of the group, which will be made public on September 14, will show an increase in sales of 11% in the second quarter in relation to the same period of 2019, also supported by the great start shown in the first month of the period (until June 5), with a rise of 17% in the interannual rate.
The company has already highlighted that the spring-summer collections had been very well received and highlighted the 13% increase in the last two weeks of May over the same period in 2021.
From Inversión.es, its analysts recall that Inditex presented in its last report results of the working capital with increases of 57% “thanks to the strong performance, with a high-quality inventory with increases of 27% that covers the possible tensions in the chain of supply”. Another factor to take into account for this and future quarters lies in the net cash position, which increased by 28% between February and April, to 9,189 million euros.
This financial position “augurs good leverage for expansion plans in the coming quarters,” adds the analysis. Bankinter experts also predict an improvement in the “value tone” of Inditex in the markets, due to the expected recovery of tourism and social activities, which entails, they add, an induced demand for clothing. They add that the prospect of less restrictions due to the covid in China “will improve the tone of the value in the short term”.
Analysts have emphasized that the textile group’s next second-quarter results will be the first without the contribution of the Russian and Ukrainian markets. In the first quarter of the year, Inditex obtained a net profit that grew to 760 million (80% more), including a provision of 216 million for estimated expenses in Ukraine and Russia in 2022. Without this provision, the profit would have reached 940 million.
Total sales of the group’s brands, including Zara, Massimo Dutti or Pull&Bear, reached 6,742 million in the first annual balance, 36% more than in the first quarter of 2021.