Inditex Earns 6% More In 2019: Provision Of €287 M For Covid-19 And Delay In Dividend

Inditex is considering manufacturing sanitary garments for helping fight against coronavirus

Inditex recorded net income of 3.63 billion euros in the fiscal year 2019-2020 (from 1 February 2019 to 31 January 2020), a rise of 6% compared to a year earlier. This was after making a 287 million euros provision in the Gross Margin to adjust the estimated value of the spring/summer campaign’s inventory affected by the Covid pandemic. Without this impact, its Gross Margin would have amounted to 16.09 billion euros, 56.9% of sales.

EBITDA was 7.59 billion euros vs 7.32 billion euros estimated, while net attributable profit stood at 3.63 billion euros (+6%) vs estimated 3.82 billion euros. Excluding the extraordinary provisioning, the NAP would have grown 12%. Net cash flow rose 20% to 8.06 billion euros. Inventories over sales are down 16% (without the impact of the provision, the fall would be 6%).

Inditex said in a statement that given the current uncertainty, it lacks the necessary conditions to take a decision on a dividend payment. This decision will be made at a Board of Directors meeting prior to the shareholders’ Annual General Meeting in July. It anticipates that sales in constant currency terms will have fallen 4.9% from 1 February to 16 March (down 24.1% from 1 to 16 March). At the moment, 3,785 stores out of 7,469 (51% of the total) are closed.

In addition, Inditex said it is going to preserve jobs and has offered its logistical capacity to the Spanish government. It is considering manufacturing sanitary garments.

It has already donated 10,000 masks and at the end of this week expects to hand over 300,000 surgical masks.