Jefferies | ITX’s Q3 update sees small misses at top-line, fx, gross margin and opex level result in a total EBIT shortfall of around 7%. Current trading is fractionally light but not inconsistent with a likely dd Q4 topline delivery. Net/net the group’s impressive growth credentials look confirmed, but the shares likely needed a better print to prevent some profit-taking today. Call at 8AM UK time.
Detail
Q3 EBIT 7% below expectations… ITX today reports Q3 (Aug-Oct) sales/EBIT/EPS of €9,357m/€2,132m/€0.54 vs cons of €9,544m/€2,281m/€0.57. Ex-fx sales growth came in at 11.1% for the Q3 period, vs cons of +12.1% and after +11% for the period 1-Aug to 8-Sep. Gross margin contracted by -20bps to 61.5%, vs cons at +13bps/61.8%. EBIT margin was down 40bps YoY to 22.8%, vs cons +74bps/23.9%. Still reported Q3 EBIT increased by 5.1% YoY despite an fx hit of >400bps.
Strong cash generation resulted in ex IFRS 16 net cash of €11.8bn, +€0.3bn YoY. This as we reach the peak of the exceptional 2yr investments into the group’s logistics backbone. Inventory control remains impressive, with stocks -2.6% YoY inc fx.
… and current trading fractionally light. Current trading for the period 1-Nov to 9-Dec came in at 9% vs cons at +11.5% for Q4 as a whole (note that the base of comparison softens from 14% in LY’s current trading to 12% for Q4 in its entirety). Guidance for FY fx remains at a -300bps impact (after -3.4% in 9m and -2.6% in H1) and GM flat, within the -50bps to +50bps range (9m 0bps, cons FY GM +15bps).
