Efficiency, profitability, and responsible expansion

For Inditex, ambition knows no bounds. Once again, the Arteixo-based company revealed record-breaking financial achievements, characterized by a 30% surge in net profit to 5.381 billion euros. Despite the evident satisfaction within the group, as expressed by its CEO, Óscar García Maceiras, Inditex aims to venture even further. During the press conference divulging the 2023 fiscal data, the prevailing theme in the discourse of the company’s top executive was undeniably the “growth opportunities” that lie ahead, ones that Inditex clearly intends to seize.

“2023 has been a year of outstanding accomplishments. Thanks to the dedication, effort, and commitment of all our professionals, we’ve been able to capitalize on various opportunities across all our commercial formats, in diverse markets and in both physical and online stores,” commenced the CEO, who assumed the position in 2021, succeeding the iconic leader of the company, Pablo Isla.

For the executive, the preceding fiscal year was underscored by growth. “This is evidenced by the highly favorable evolution of our sales, reaching 35.947 billion euros, a growth of 10.4% compared to 2022,” he reiterated, emphasizing the stellar performance across geographical areas and commercial formats, all of which witnessed double-digit sales growth. Zara remains the flagship brand of the group, generating the highest turnover. In 2023, the brand increased its sales by 10% to 26.050 billion euros. Nevertheless, Oysho recorded the most significant growth, up by 19% to 744 million euros.

Meanwhile, the online channel achieved a turnover of 9.064 billion euros, marking a “satisfactory growth” of 16% compared to the previous year. “Undoubtedly, this surge has been greatly facilitated by over 251 million social media followers and over 6.5 billion platform visits throughout the year, averaging 18 million visits daily,” pointed out García Maceiras. Presently, the digital channel accounts for 25.2% of the group’s total turnover, yet still falls short of the 30% global target.

Investing “whatever is necessary”

“Our growth is exceedingly positive, efficient, profitable, and responsible. We’ve upheld our discipline in cost management,” reiterated García Maceiras multiple times, highlighting the company’s “rigorous control” of operating expenses, which stood at 10% in 2023, below the sales growth rate. Simultaneously, cash reserves surged by 13% to 11.406 billion euros. “It’s this robust financial position that will enable us to continue investing whatever is necessary for the group’s future growth, in addition to upholding our commitments and ensuring an attractive return for our shareholders,” elucidated the executive.

Moreover, the CEO emphasized the company’s tax contribution, reaching 8.680 billion euros with an effective tax rate of 21.5% in 2023. Specifically in Spain, the tax contribution exceeded 2.230 billion euros, accounting for more than 25% of the total tax contribution of the conglomerate founded by Amancio Ortega.

When questioned by journalists about whether Inditex will disclose the list of suppliers within its supply chain, as other competing companies have already done, García Maceiras simply affirmed that such information is shared with the company’s stakeholders, ensuring the traceability of its chain. In the domestic market, the CEO asserted that Inditex maintains “a close relationship with over 6,600 Spanish suppliers,” who invoiced the group nearly 6.9 billion euros in the past fiscal year.

“Quality” employment and “headquarters effect”

“We uphold our commitment and aim to be providers of quality employment in each market where we operate.” In the domestic market, the company’s workforce reached 47,761 individuals, 1,600 more than in 2022. “We continue to offer quality employment. 87% of our personnel have indefinite contracts and opportunities for professional development.”

Regarding the team’s hallmarks, he noted: “We are all united by a blend of humility, prudence, and ambition, which characterizes our DNA, along with a spirit of dissatisfaction that has enabled us to achieve these excellent results. Undoubtedly, this identity will guide us towards the future in order to maintain this path to growth.”

Throughout the past fiscal year, Inditex paid 2.351 billion euros in taxes in its home country, marking a 24% increase compared to the previous year, when its tax contribution had already risen by 20% compared to the preceding fiscal year. Meanwhile, the amount paid in Spain accounts for 25% of the total paid worldwide, exceeding 9.4 billion euros and economically contributing to the “headquarters effect” highlighted by García Maceiras.

Outlook for the current fiscal year

“2024 has commenced on a highly positive note, despite the persistence of a very complex environment. Growth rates are relatively moderate in most markets, accompanied by inflationary pressures and geopolitical instability,” analyzed the executive. Thus, between January 1 and March 11 (adjusted for the leap year), sales surged by 11% compared to the equivalent period of the previous year.

“This favorable evolution propels us to continue promoting initiatives that enable us to seize all the opportunities that come our way and that are aimed at enhancing and developing the four engines of our business model: a unique fashion proposition, an increasingly enhanced customer experience, a firm and defined commitment to sustainability and talent, and the commitment of all our personnel,” noted García Maceiras.

For this year, following a hiatus of over two years in Russia (formerly the conglomerate’s second-largest market after Spain) and Ukraine, Inditex plans to return to Ukrainian soil from April 1 onwards, with the reopening of 50 establishments.

Optimization of the commercial network and new markets

“We will continue to explore new markets,” anticipated the CEO. In 2023, Inditex opened stores in 41 countries, including Cambodia and Uzbekistan. By the year’s end, the group operated a total of 5,692 stores (4,589 owned and the rest franchised), reflecting a 2% reduction, with 123 fewer stores than in 2022. Nonetheless, the company increased its net commercial space by 2%.

At the close of the fiscal year, Spain counted 1,157 physical stores, 68 fewer than the previous year. This figure represents the lowest in the last two decades. “We’ve been implementing a program of enhancements and optimization of our commercial network for some time now,” continued García Maceiras. “Our endeavours encompass the identification of commercial spaces that allow us to offer our customers the full breadth of products, presenting differentiated spaces,” he argued, citing the example of the recent reorganization of Zara’s space in the Plaza del Duque in Seville.

This year, given the “positive results of its online activity through its website and Zara.com,” Massimo Dutti will open a store in Miami, and Oysho will land in Germany, with a first boutique in Hamburg. Meanwhile, Bershka and Zara Home will make their debut in India. In parallel, the company plans to introduce its second-hand Zara clothing management platform, Zara Pre-owned, to the USA.