FX.co ★ Inditex Stock Up On Strong Q1 Results, Q2-to-date Sales Growth

Inditex SA experienced a morning trading increase of approximately 5% in Spain, following its announcement of higher profit and sales in the first quarter. The Zara owner also proposed a dividend. The Spanish clothing retailer reported a 12% growth in store and online sales, measured in constant currency, between May 1 and June 3.

Looking forward to fiscal year 2024, Inditex anticipates a stable gross margin, with a possible fluctuation of plus or minus 50 basis points, and projects a negative 2% impact on sales due to current exchange rates.

Inditex highlighted ongoing strong growth opportunities and is initiating several new strategies across all key areas for the coming years. The annual increase in gross space from 2024 to 2026 is expected to be around 5%.

Additionally, due to robust future growth prospects, Inditex is implementing a logistics expansion plan for 2024 and 2025.

The company's Board of Directors plans to propose a FY2023 dividend of 1.54 euros per share at the Annual General Meeting on July 9, with the final payment of 0.77 euros per share scheduled for November 4.

Furthermore, the Board intends to propose the reappointment of Baroness Denise Kingsmill and the appointment of Belen Romana García as independent board members at the upcoming AGM. Flora Pérez Marcote will be proposed as proprietary director, while Anne Lange will step down from the Board after her term expires on July 14.

The Board also plans to propose reducing the term of new board members to two years.

For the first quarter, net income increased by 10.8% to 1.29 billion euros, compared to 1.17 billion euros the previous year. Earnings per share rose to 0.416 euros from 0.375 euros last year.

Profit before tax saw an 11.1% rise to 1.7 billion euros, with EBIT increasing by 10.3% to 1.6 billion euros and EBITDA growing by 8% to 2.4 billion euros.

Sales increased 7.1% to 8.15 billion euros, up from 7.61 billion euros the previous year. When considering constant currency, sales grew by 10.6%.

The company noted a strong reception for its Spring/Summer collections.

In Spain, Inditex shares were trading at 45.97 euros, up 4.64%.