Clothing & Shoes

Inditex FY21 profits surge 199% despite Omicron impact

Overall, online sales grew 14% to reach €7.5bn (£6.31bn), representing 25.5% of total sales in 2021

Inditex, the parent company of Zara, has reported its income before tax surged 199% to €4.19bn (£3.53bn) between 1 February 2021 and 31 January 2022 (FY21), rising year-on-year from €1.4bn (£1.17bn).

Net income also surged 193% to €3.2bn (£2.73bn) compared to €1.1bn (£9.29m) in FY20.

Additionally, sales increased 36% year-on-year to €27.7bn (£23.32bn) and sales in constant currencies increased 37%. Online sales also grew 14% to reach €7.5bn (£6.31bn), representing 25.5% of total sales in 2021.

Inditex also owns Pull&Bear, Massimo Dutti, Bershka, Stradivarius, Oysho, Zara Home and Uterqüe, and it reported gross profits increase of 39% to €15.8bn (£13.31bn). The gross margin reached 57.1%, up 123 bps year-on-year, which is the highest in six years.

Meanwhile, EBITDA grew 58% €7.2bn (£6.06bn), EBIT increased 184% to €4.3bn (£3.61bn) and PBT increased 200% to €4.2bn (£3.53bn).

However, Inditex said the final part of the year was impacted “significantly” by the decrease in store traffic due to the spread of the Omicron variant. The drop in store sales reportedly generated a one-off impact of €400m (£336.68m) in the fourth quarter.

The impact on the gross profit due to increased markdowns as a result of the outbreak was approximately €210m (£176.75m). Due to the sudden drop in store sales, the Christmas season and the additional costs linked to increased online sales impacted a further €190m (£159.92m).

Overall, the sales volumes were achieved with 5% less stores in operation versus 2020, 13% less from 2019.

The company’s spring/summer collections were “very well received” by customers, and store and online sales in constant currency from 1 February to 13 March were 33% above 2021 and 21% above the “historic pre-Covid highs” of 2019. 

In this period, sales in the Russian Federation and Ukraine represented approximately 5% of sales growth.

In addition, Inditex said all expense lines have shown a “favourable evolution” and the USA became the largest market for Inditex in 2021 after Spain.

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