Inditex Stock Up On Q1 Profit Growth; Sees Flat Margin In FY23

(RTTNews) - Shares of Inditex SA were gaining around 6 percent in the morning trading in Spain after the clothing firm that owns Zara reported Wednesday significant growth in its first-quarter profit on higher revenues as well as the absence of a prior year provision.

Regarding the second quarter to date, the company said its store and online sales in constant currency between May 1 and June 4 increased 16 percent versus the same period in 2022. Inditex said it continues to see strong growth opportunities. Spring/Summer collections continue to be very well received by customers, it said.

For fiscal 2023, the company expects a stable gross margin, plus or minus 50 basis points. At current exchange rates, Inditex expects a negative 2.5 percent currency impact on sales.

The company said, "We expect increased sales productivity in our stores going forward. The growth of gross space in 2023 will be around 3 percent. Optimisation of stores is ongoing. Inditex expects space contribution to sales to be positive in 2023. We continue to see a very satisfactory evolution of online sales and an increasing participation in the group total."

As announced earlier, Inditex's Board of Directors will propose to the Annual General Meeting a dividend for fiscal 2022 of 1.20 euros. The dividend is composed of two equal payments of 0.60 euro per share. The first interim payment was made on May 2 and the final dividend payment will be made on November 2.

For the first quarter, net income increased 54 percent to 1.2 billion euros from last year's 760 million euros.

The prior year results reflected a provision for expected expenses in the Russian Federation and Ukraine of 216 million euros.

Profit before tax grew 52 percent to 1.5 billion euros, and EBIT increased 43 percent year-over-year to 1.5 billion euros. EBITDA increased 14 percent to 2.2 billion euros.

The gross margin reached 60.5 percent, 34 basis points higher than last year. Operating expenses increased 13 percent, below sales growth.

Sales grew 13 percent from the prior year to 7.6 billion euros, with good development both in stores and online. Sales were positive in all geographical areas and in all concepts. Sales in constant currency grew 15 percent.

In Spain, Inditex shares were trading at 33.80 euros, up 6.2 percent.

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