Spanish-owned international fashion conglomerate Inditex has seen sales and profits rise across the first trading quarter of 2022, with sales up 17% across the retail group generating revenue growth of 36% to €6.74bn.
The fashion giant, which owns Zara, Massimo Dutti, Pull & Bear, Stradivarius and Bershka, says the quarter was marked out by a sharp recovery in store footfall and a warm reception for all seven brands’ new season collections. Despite this, online sales saw only a 6% drop, indicating that the group has retained almost all of the extraordinary online growth of 67% achieved in 1Q21.
Óscar García Maceiras, Inditex’s CEO, said that this set of earnings is the result of a “well-differentiated model that is delivering strongly. The strength and adaptability of the business model and the excellent performance of our creative, sales and operating teams are driving that differentiation forward, underpinned by a strategic focus on innovation, digitalisation and sustainability”.
Net profit amounted to €760m, up 80% year-on-year, thanks to the Group’s strong business performance. The gross margin came in at 60.1%, the highest level in a decade, while growth in operating expenses (+24%) was below sales growth.
The company has decided to recognise a provision of €216m to cover all of the extraordinary costs derived from the temporary closure of its business in Ukraine and Russia. That provision has been recognised under “Other results”; without it, the Group would have reported net profit of €940m.
Q2 22 has also started strongly, the company says, with sales increasing by 17% in constant currency between 1 May and 5 June 2022, hitting 13% during the last two weeks of the period.
The retail group is also pressing ahead with its plan to use technology to make its entire textile business circular and in May signed a three-year agreement worth some €100m with Infinited Fiber Company, under which it has committed to purchase 30% of future production of Infinna, a textile fibre created entirely from textile waste.