The year began with robust momentum for Inditex, continuing a long streak of strong performance following a challenging first half last year. The group posted a solid start to the year, with a gain of +5.2%, extending a trend that, when added to the previous three months, outpaced the 2018 peak. Inditex reached 26 euros per share, a level not seen in almost a year and last touched on February 10. Two weeks later, the conflict in Ukraine intensified concerns as global markets reeled. Despite this, the market value of the Galicia-based group fluctuated in the ensuing months.
The shares dipped to a low on May 10, closing at 19.71 euros, a level not seen since July 2013 and well below the pandemic-induced lows. The market capitalization stood at 61.429 billion euros. A year earlier, on May 23, 2021, Inditex had celebrated two decades as a listed company, with a capitalization around 100.387 billion euros. Two years on, the value was around 30% lower. Uncertainty from the Ukraine conflict, along with the company’s strategic direction and rising raw material costs, weighed on sentiment. The exposure to key markets, including Russia, remained a particular concern, Russia being the second-largest market after Spain.
By late April, the retailer faced renewed selling pressure, yet Inditex shares began to climb again as quarterly results reflected strong performance. Between August and October, the company earned 1,301 million euros, up from 1,227 million euros a year earlier, and the 8,000 million euro milestone was surpassed for the second consecutive quarter. It was the best quarter ever, even when compared with a previous quarter that had already stood out as one of the best in the last four decades.
External headwinds, including Russia’s exit announced on October 25 and the closure of more than 500 stores since March 5, did not derail the earnings story. Rising raw material costs, inflation, and selective price increases created a challenging backdrop, yet the income statement remained resilient.
The rally in the final quarter of 2022 lifted share values by 27%: from 20.5 euros on September 29 to 26.1 euros the day before, translating into a market capitalization exceeding 81.5 billion euros. A hypothetical investor putting 1,000 euros into Inditex at the end of September and selling yesterday would have recovered the initial investment and earned approximately 270.27% on top of it. This gain contributed to a 32% revaluation pre-war, starting from a May 10 trough of 19.71 euros. At the time, market analysts indicated further upside for the group, with Morgan Stanley suggesting a price target around 27 euros since December.
Negotiations in Galicia: wage policy and store staff reforms
In parallel, labor unions CCOO and UGT prepared to engage with Inditex on January 25 to discuss wage policy and inflation offset measures across all brands and regions. The unions stated that the board would formalize a global salary strategy that captured inflation’s impact on purchasing power and aligned with provincial collective agreements, ensuring fair compensation across all group companies. They emphasized the need to review and enhance the workplace staffing commissions framework. The talks also include a coordinated plan to address equality across the group, with scope and criteria to be set at the national level under Inditex guidance. A central objective is to reform the commission system for store staff, aiming to deliver a meaningful improvement to workers’ compensation.
These negotiations reflect a broader effort to balance competitive wage policies with the company’s operational needs in a rapidly changing retail environment. The discussions also underscore the importance of aligning labor agreements with inflation dynamics and regional variations, ensuring workers across all regions share in the company’s ongoing profitability. The participants expect constructive engagement that recognizes both the company’s strategic priorities and the workforce’s expectations for fair and transparent compensation.