Inditex earnings up 27% to €4,130mm, dividend raised 29% to €1.20/share

Inditex Zara

ITX sales reached €32,569 million in 2022, up 17.5% year-on-year (+18.0% at constant rates; +0.1% FactSet consensus), with growth in all geographic areas where ITX operates, and in both physical and online shops. In-store sales increased 23% year-on-year, due to higher commercial traffic, while online sales rose 4% year-on-year, reaching a record €7,806 million, 23.97% of the total. Broken down by geographic area, 47.5% of sales came from Europe (excluding Spain); 20% from the Americas; 18.1% from Asia and the Rest of the World; and 14.4% from Spain.

Gross margin increased 17% year-on-year in 2022 to €18,559 million, representing 57% of sales (57.1% in 2021).

Furthermore, tight control of operating expenses (+15% year-on-year) enabled ITX to increase its operating cash flow (EBITDA) to €8,649 million (+20.4% y-o-y; +1.1% analyst consensus). In terms of sales, the EBITDA margin improved from 25.9% in 2021 to 26.6% in 2022.

EBIT rebounded 28.9% from 2021 to €5.52 billion, although it was slightly below (-1.1%) the FactSet consensus forecast. In terms of sales, the EBIT margin reached 16.9%, well above the 15.4% of 2021, but below the 17.2% of the consensus.

Profit before tax (PAT) also grew, by 27.6% year-on-year (-1.4%; analysts’ consensus), to €5,358 million. Finally, ITX’s net attributable profit closed 2022 at €4,130 million, 27.4% higher than in 2021, but also slightly below (-1.0%) the FactSet consensus expectation.

Funds generated (adjusted for lease payments) grew by 18%, while net cash increased by 8.0% to €10.07 billion.

The ITX Board of Directors will propose to the Annual General Meeting a dividend increase of 29% for the financial year 2022 to EUR 1.20 gross per share, including an ordinary dividend of €0.796 gross and an extraordinary dividend of €0.404 gross. The dividend consists of two equal payments of €0.60 gross per share, payable in May 2023 and November 2023 (€0.196 gross + €0.404 gross).

Shop and online sales at constant rates between 1 February and 13 March increased by 13.5% compared to the same period in 2022. Adjusting for the operations in the Russian Federation and Ukraine during 2022 (1 February to 13 March), shop and online sales at constant rates increased by 17.5%.

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The Corner
The Corner has a team of on-the-ground reporters in capital cities ranging from New York to Beijing. Their stories are edited by the teams at the Spanish magazine Consejeros (for members of companies’ boards of directors) and at the stock market news site Consenso Del Mercado (market consensus). They have worked in economics and communication for over 25 years.