second half of 2023
Inditex reported a strong first half of the 2023-2024 financial year, spanning February 1 to July 31, with net profit reaching 2.513 billion euros. This represented a 40.1% increase from the same period the previous year and surpassed market expectations, marking a record level of earnings for the group.
Net sales rose 13.5% to 16.851 billion euros, with in-store and online channels both performing well. At constant exchange rates, sales grew 16.6% across all regions and formats, signaling broad-based momentum for the brand.
Operating profitability showed healthy gains. Gross operating income (EBIT) advanced 15.7% to 4.663 billion euros, while net operating income (EBIT) climbed 30.2% to 3.164 billion euros. Pre-tax earnings increased by about 39% to reach 3.252 billion euros, underscoring the company’s robust operating discipline.
The gross margin improved to 58.2% of sales, rising 27 basis points year over year to 9.801 billion euros, a sign of efficient cost management and pricing power. Inditex continues to anticipate a stable gross margin within a narrow range for 2023, aiming to preserve profitability amid a dynamic market environment.
During the first quarter, Inditex allocated 216 million euros to the line labeled Other results, reflecting estimated expenses for the 2022 financial year in the Russian Federation and Ukraine. This indicates the company’s careful approach to regional exposure while maintaining core operations elsewhere.
Executives highlighted that the results reflect the talents of its teams, a strong commitment to creativity, product quality, and customer experience, and steady progress in sustainability. The leadership emphasized that these elements are lifting the business model to a higher level.
The chairwoman noted that operating performance remained resilient in the first half, with spring-summer collections highly valued by customers. The integrated store and online model continued to perform well, driven by effective execution and creative input from the company’s teams.
Between February and July, Inditex operated 5,745 stores across 20 markets, continuing its expansive footprint. The net financial position also strengthened, rising 14.1% year over year to 10.546 billion euros at the end of the first half of fiscal 2023, reflecting solid cash generation and balance sheet health.
Inventory levels declined by 6.9% as of July 31, 2023, compared with the prior year, a sign of enhanced supply chain alignment and tighter inventory control amid improving market conditions.
On the cost side, all expense items showed positive momentum. Total operating expenses rose 12.5% on an annual basis, with lease costs included, yet this growth was well below the pace of sales, leaving margins supported and profitability intact.
Inditex also reported strong cash generation. After adjusting for lease payments, operating cash flow rose 35.4%, while cash from operations increased 57.4%, reflecting efficient capital management and ongoing investment in the business model.
second half of 2023
For the autumn-winter period, collections were well received by customers, reinforcing confidence in the brand and its product strategy. From August 1 to September 11, 2023, in-store and online sales at fixed exchange rates grew by 14% versus the same window in 2022, illustrating continued demand resilience and effective omnichannel execution.
massive growth opportunities
Inditex reiterated its view of substantial opportunities for future expansion. The company plans to invest to enhance operating capacity, improve efficiency, and differentiate its offering to sustain growth in a competitive market.
The investments for 2023 are expected to amount to around 1.6 billion euros, signaling a continued commitment to capacity expansion and capability building across the network.
Management stated that the primary focus remains on refining fashion offerings, optimizing the customer journey, increasing sustainability efforts, and maintaining the talent and dedication of employees. This approach is seen as a driver of long-term growth and a platform for maintaining a unique market position with strong potential.
Inditex operates in 213 markets, underscoring its expansive global footprint. The group continues to view growth opportunities as substantial while keeping its exposure balanced in a fragmented sector. The company expects ongoing improvements in store efficiency, with space growth projected to be around 3% in 2023, and a positive contribution from store space to sales. Online sales are expected to remain a key growth driver alongside the overall business, with the company forecasting a favorable balance of physical and digital channels as it navigates exchange rate dynamics and market conditions for 2023.