Inditex reported net profit of 4,102 million euros for the first nine months of the 2023-2024 financial year, covering February 1 to October 31. The result marks a 32.5% rise versus the prior year, according to the company on a Wednesday release.
Group sales climbed 11.1% to 25,609 million euros. Management described the performance as a very satisfactory mix of store and online growth across all regions and formats. In the third quarter alone, sales reached 8,758 million euros, up 6.7% year over year, continuing a streak of ten consecutive quarters with double-digit increases.
Autumn-winter campaign collections were very positively received by customers, driving a 14.9% increase in sales at constant exchange rates.
Gross profit rose to 15,203 million euros, up 12.3%, representing 59.4% of sales with a 67 basis point improvement from the previous year.
All expense lines showed positive momentum. Operating expenses grew 10.6% while remaining below sales growth, including lease expenses, by 130 basis points.
Management commented that the business model implementation remains outstanding. The autumn-winter 2023 campaign also benefited from a normalization of the supply chain and a more favorable euro-dollar rate compared with the 2022 campaign.
EBIT advanced 13.9% to 7,429 million euros, and net operating profit rose 24.3% to 5,192 million euros. Profit before tax reached 5,238 million euros, up 29.8%.
In the first nine months of the 2022 financial year, Inditex set aside 231 million euros under the Other Results line for estimated expenses related to the 2022 financial year in the Russian Federation and Ukraine.
Net cash increased 15% year over year, reaching 11,480 million euros.
The group, which opened additional stores during the period, highlighted that its strong operational performance was supported by the creativity of its teams and the successful integration of store and online channels across 36 markets. At period end, Inditex operated 5,722 stores.
Inventories stood 5% lower as of October 31, 2023, versus the same date a year earlier, reflecting robust execution and earlier normalization of supply chain conditions in the first nine months of fiscal 2023.
Predictions
Looking into the early part of the fourth quarter of fiscal year 2023, Inditex noted that autumn-winter campaign collections were very well received by customers.
Between November 1 and December 11, 2023, in-store and online sales, at fixed exchange rates, rose 14% versus the same period in 2022. In this context, the group emphasized continued opportunities for future growth.
Management stated that the top priorities remain enhancing the fashion offer, refining the customer experience, boosting sustainability efforts, and retaining talent and commitment from employees. Focusing on these areas is expected to support long-term growth.
The company remains present in 213 markets and notes a highly fragmented industry with a relatively small share for any single market, which it views as a source of continued growth opportunities.
Looking ahead, Inditex expects a gradual improvement in sales efficiency in its stores, with gross growth in 2023 projected around 3% and ongoing store optimization efforts. Reported 2023 sales are positive overall.
The online channel is anticipated to continue growing its share of total sales, reflecting a favorable shift toward multi-channel integration.
Based on current exchange rates, the currency impact on sales for 2023 is expected to be negative around 4%. Available information suggests a gross margin approximately 75 basis points higher in fiscal 2023 than in 2022.
In the current fiscal year, investments aim to boost operating capacity, improve efficiency, and differentiate the brand. Routine investments are projected to reach about 1.6 billion euros in 2023.