Inditex closed the 2021 financial year, the last of its president Pablo Isla at the helm of the company after more than 15 years at the helm of its management, recovering a good part of the income and profits lost due to the pandemic, but without reaching pre-existing levels. Covid nor achieve new record heights.
The textile giant ended the last accounting year, ended in its case on January 31, 2022, with about income of 27,716 million euros, 36% more than in the previous year and 2% below the year prior to the pandemic; and with one net income of 3,243 million, practically triple what was registered in 2020, but 11% less than two years ago. The company will allocate 60% of that profit to dividend paymentwhich will be for a total of 0.93 euros, made up of an ordinary payment of 0.63 euros and another extraordinary payment of 0.30 euros.
The Bloomberg consensus calculated total sales of 27,887 million euros, just 1.4% below the 2019 figures, and a net profit of 3,678 million, 1% more than then, with which the results are are below those forecasts.
Strong omicron impact
The rate of recovery that Inditex showed, especially in a third quarter with record revenues and profits, was slowed down in the final stretch of the year. As the company acknowledges, it registered “a sudden drop in commercial traffic in stores due to the spread of the omicron variant, restrictions in most markets, and temporary closures in Austria, the Netherlands, Germany, Japan, China and the Philippines” .
A situation that had “extraordinary impact” of 400 million, encrypts the company. Of these, 210 in the gross margin, due to higher sales with discounts. “Due to the rapid drop in store sales, it was difficult to offset the incremental expenses associated with the Christmas campaign and the additional expenses from increased online activity.” describes. Another 190 million impacted on operating costs.
This impact on profitability can be seen in the net profit for the fourth quarter, which was 743 million, 40% lower than the third quarter and also worse than the second, when the group was still heading for recovery. Revenues in that period were 8,391 million, 1% below the same period of that year.
Once this variant has been overcome, Inditex highlights a start to the spring/summer 2022 campaign with a return to “previous positive patterns”.
“After two years of the pandemic, these results demonstrate the great capacity to adapt to any circumstance that characterizes the people who make up this company through commitment and talent,” said Pablo Isla, who is still president of the group, in a statement. The CEO, Óscar García Maceiras, has highlighted that “the leadership shown by the company in the digital transformation of recent years places us in an unbeatable position for the future to offer the best experience in our fashion proposal of quality and sustainable.
Online sales: target for 2024
What continues to grow strongly is the online channel. Sales through this channel grew by 14% at the end of the year to 7,500 million euros, 25.5% of total sales, with 6,200 million visits. The group has reported the objective of exceeding 30% of turnover in 2024.
The EBITDA at the end of the year was 7,183 million, 58% more than in the previous year, and the gross margin was 15,814, representing 57.1% of sales, the highest level in the last six years despite the impact in the final stretch of the year.
The net financial position grew by 24% to 9,359 million, a new record, with almost 7,400 million in cash.
The relationship between Isla and Inditex will come to an end on March 31, and from April 1 the group’s presidency will be occupied by Marta Ortega, daughter of the group’s largest shareholder, Amancio Ortega. Since the end of November, Óscar García Maceiras has already held the position of CEO, who will assume command of management with the departure of Isla.
The results presented today still do not reflect the impact that the Russian invasion of Ukraine may have on the textile business. This communicated on March 5 the closure of all stores located in Russia, the second country where it has the most stores with 527, as well as online sales.