The Inditex Group has reported that its profits increased 80% year-on-year to €760m (£647.7m) in the period ended 1 February to 30 April 2022 (Q1), amid a “sharp” recovery in store traffic and a “good” reception for all seven brands’ new season collections.
However, the group made a provision of €216m (£184.08m) to cover all of the costs derived from the conflict in Ukraine, including the temporary closure of its business in Ukraine and Russia.
EBITDA registered growth of 55% to €1.92bn (£1.63bn), while EBIT grew by 82% to €1.03bn (£877.81m). The group’s gross margin also hit 60.1%, reportedly marking the highest level in a decade.
Meanwhile, group revenue from online sales declined by 6% year-on-year as stores reopened, meaning that the group has retained almost all of the online growth of 67% achieved in Q1 FYQ21.
Overall, growth was experienced across all geographies, with the exception of Ukraine and Russia where the group’s stores and online platforms have been temporarily closed, and 67 stores in China were affected by Covid-related restrictions. However, the US market continued to post “notable” growth, becoming the group’s second biggest market.
At the start of Q2, the spring-summer collections reportedly received an “excellent” response from the customers, and sales increased 17% between 1 May and 5 June 2022.
Óscar García Maceiras, Inditex chief executive, said that this set of earnings is the result of a “well-differentiated model that is delivering strongly”.
He said: “The strength and adaptability of the business model and the excellent performance of our creative, sales and operating teams are driving that differentiation forward, underpinned by a strategic focus on innovation, digitalisation and sustainability.”
Additionally, Inditex has signed a three-year agreement worth over €100m (£85.22m) with Infinited Fiber Company. Under the agreement, Inditex has committed to purchase 30% of future production of Infinna, a textile fibre created entirely from textile waste.
This project is another product of Inditex’s Sustainability Hub, the group’s open innovation platform created to promote and scale up innovation in materials, technologies and processes that move forwards towards sustainable solutions.