The Q1 2026 results (ended 30 April) slightly beat expectations: sustained sales growth and widening margins in a challenging environment.
Bankinter Analysis
Q1 2026 results slightly beat expectations and reflect the strength of the business model in a challenging environment, where listed competitors (H&M, Fast Retailing, GAP) are posting weaker performance in terms of growth and margins. Sales at constant exchange rates grew by 8.8% compared to the expected 8.4% and the 1% average of its competitors.
The start of Q2 has been solid: between 1 May and 1 June, sales rose by 11.5%, although adjusted for a positive calendar effect, a more representative rate would be 8%–9%. The Gross Margin improved by 67 basis points to 61.2% (competitor average 47.8%) and the EBIT Margin by 30 basis points to 20.1% (competitors 8.2%). Although in the coming quarters these improvements will tend to be diluted by a reduced favourable impact from exchange rates and rising transport costs, margins will remain supported. In 2025, the extraordinary investment programme of €900 million per year will come to an end, allowing for an acceleration in free cash flow generation.
This will be accompanied by lower working capital usage, which was exceptionally high in 2025. Against a backdrop of weak discretionary spending, Inditex continues to show sustained sales growth and supported margins.
It continues to gain market share in a highly fragmented market, and the group identifies growth opportunities, particularly in the United States. In a challenging environment, with a decline in purchasing power and consumer confidence, Inditex remains confident that growth depends primarily on the execution of its business model and its ability to adapt to consumer trends. The Q1 26 results reaffirm confidence in the superiority and resilience of its business model.
Following a year-on-year decline of 3.7%, multiples are in line with the historical average (P/E 26 24.6x; EV/EBITDA 12.9x compared to 24.8x and 13.5x respectively). We reiterate our Buy recommendation with a Target Price of €60 per share (up from €57 per share).
You can read the full analysis of the company here (in Spanish).
Recommendation: Buy €60/share
