Inditex moderates its growth pace and invests in long-term performance

Despite moderating its growth pace, Inditex continues to break records. This has been clearly demonstrated in its financial performance during the first quarter, spanning from February 1 to April 30. The company achieved its highest first-quarter revenue in history, amounting to €8.15 billion. However, this increase was a modest 7.1%, compared to a 13% rise in the previous year. Nevertheless, net profit showed a significant rise, increasing by 10.8% to reach €1.294 billion.

“We are very pleased with our current performance. We are continuously optimising all our stores and identifying new opportunities for profitable growth within Spain, across all our concepts,” stated CEO Óscar García Maceiras during the analyst conference held on Wednesday, June 5.

Moreover, García Maceiras emphasized the strong global sales performance across both physical and online channels. Excluding the impact of exchange rate fluctuations, sales grew by 10.6% during the period. Looking ahead to the second quarter, with results to be published on September 11, the group, headquartered in Arteixo, A Coruña, noted the “positive reception” from customers. Sales in both physical and digital channels, when adjusted for constant currency, grew by 12% from May 1 to June 3, 2024, compared to the same period last year. However, at current exchange rates, the company anticipates a -2% currency impact on sales for 2024.

“We continue to strengthen the core pillars of our business model. We are enhancing our product offerings and collections, making significant strides in sustainability, and actively nurturing our talent pool. Furthermore, we are focused on enhancing the customer experience by optimizing our store network through strategic new openings and refurbishments in prime locations across each market,” García Maceiras elaborated. “By maintaining these priorities, we will ensure the group’s long-term growth,” the company asserted, emphasizing that its “unique market positioning” offers Inditex’s business model “significant growth potential.”

In line with this strategic development, the company founded by Amancio Ortega plans to invest around €1.8 billion in the current fiscal year. Inditex also announced an ambitious logistics expansion plan for 2024 and 2025, aimed at business growth and enhancing logistics capacity. The company plans to invest €900 million annually in this initiative.

Regarding the expansion of its physical store network, the group reported a net increase in its store count for the first time since 2021. This included six net openings, in contrast to the 14 net closures reported in the first quarter of the previous year. Over the past three years, Inditex’s strategy to optimize its commercial network has involved a gradual reduction in the number of its stores. By the end of the first quarter of 2024, the company had a presence in 214 international markets with a total of 5,698 stores, which is 103 fewer than the previous year.

Among the notable recent openings are Zara’s new locations, such as Zara Piraeus Tower in Athens, and significant expansions and refurbishments like Zara Rivoli in Paris, Zara Skokie in Chicago, Massimo Dutti in Cannes, Oysho in Stratford, London, and the one-year Zara Home pop-up shop on Rue du Bac in Paris.

The company anticipates that its gross retail space will grow by 5% annually through 2026. Recently, the group has inaugurated its first stores in Uzbekistan and reopened 48 stores in Ukraine.

Lastly, the group, chaired by Marta Ortega, highlighted significant initiatives such as the launch of Massimo Dutti on the Chinese e-commerce giant JD.com and the rollout of innovative security technology that eliminates traditional alarms. This cutting-edge system will be fully operational in Zara stores throughout the year and will gradually be implemented across all brand outlets.