Zara-owner Inditex swings to profit, sales increase 49 percent

The Inditex Group reported revenue of 11.94 billion euros in the first-half, representing growth of 49 percent year-on-year or 53 percent in local currencies. Net profit amounted to 1.27 billion euros compared with a loss of 195 million euros in the first half of 2020.

The company’s second-quarter revenue grew 7 percent in local currencies to 6.99 billion euros, while net profit reached 850 million euros, outperforming the previous high set in 2Q19.

Commenting on the company’s performance, Inditex’ executive chairman, Pablo Isla, said: “This strong performance is the result of the commitment displayed by everyone at the company and their continued focus on delivering top creative and quality fashion. Thanks to all of them we are reaping the benefits of the strategic and sustainable transformation in our unique business model.”

Highlights of Inditex’s first half results

The company said that first half earnings were robust despite trading hours being down by 15 percent in H1 and 6 percent in 2Q21, due to closures, limitations and capacity restrictions across the group’s various markets and specific locations due to the pandemic.

The group’s online sales reached 36 percent above 1H20 levels and 137 percent above the pre-pandemic 1H19 figure. Online sales are expected to account for more than 25 percent of total sales in FY2021.

The group’s first-half gross margin was 57.9 percent. The company forecasts a full year gross margin of around 57.5 percent (+/- 50bps) in 2021.

The company added that after the start of the second half, specifically between 1 August and 9 September 2021, store and online sales, in local currencies, increased by 22 percent and by 9 percent compared to the same period of 2019.

The company’s shareholders have approved the board’s motion to distribute a dividend of 0.70 euros per share, of which 0.35 euros was paid out on May 3, 2021 with the remaining 0.35 euros due on November 2, 2021.