Morgan Stanley| Inditex (ITX) reported very solid Q3 results with a slight beat in EBIT driven by a strong performance in gross margins, which rose 150bps year-on-year and beat consensus estimates by 70bps.
Moreover, all this has led the company to raise margin guidance for FY23. On the other hand, sales came in line with consensus, with +12% cc growth, and current trading activity (1 November to 11 December) points to +14% year-on-year growth, implying a strong acceleration from Q3. These results are all above consensus figures for 4Q, although Grace Smalley acknowledges that, based on conversations she has had over the last few days, manager and fund expectations are significantly higher than consensus.
Overall, Grace expects further upward earnings revisions as a result of this release, supported by the solid Q3 results, the strong Q4 trading activity and the 4Q gross margin guidance increase to +100bps.
