Inditex profit drops but sales recover over Q2

Inditex generated a net profit of 671 million euros in the nine months of FY20 and 866 million euros in the third quarter, while Ebitda reached 1.85 billion euros in the quarter, down from 2.23 billion euros in the prior year. The company said in a statement that the sales trend continued to improve with sales declining by 14 percent or 10 percent in constant currencies in the third quarter, compared to reductions of 31 percent in the second quarter and 44 percent in the first quarter of 2020. Growth in online sales was 75 percent in constant currencies in the first nine months of the year, and 76 percent in the third quarter.

Commenting on the trading performance, Inditex’s Executive Chairman, Pablo Isla, said: “These results are the direct consequence of effective management in every area of the company, with a seamless coordination between each link in the business model: design, product, manufacturing, logistics, stores and online. They are also evidence of the group’s ability to react and adapt continuously in an unpredictable environment and its unwavering commitment to offering unbeatable product, quality and service”.

Highlights of Inditex’s trading performance

The company added that in November, with 21 percent of the group’s stores closed with new restrictions on store opening capacity and trading hours, sales in local currencies were equivalent to 81 percent of the year-earlier volume, a figure that has risen to 87 percent from December 1st to 10th.

The group continued to expand retail presence in 25 markets during the nine-month period, including in China, Mexico, Russia, Germany, The Netherlands, Spain and Saudi Arabia.

During the first nine months, gross margin remained at 58 percent of sales in 9M20, compared to 58.2 percent in 9M19 due to the execution of the business model. In local currencies, the gross margin expanded by 110 basis points to 59.3 percent. EBITDA amounted to 3.3 billion euros in 9M20, while EBIT stood at 946 million euros.

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