Inditex returns to profit in Q2, expects further recovery in Q3
Inditex Group sales continued to recover during the first half of 2020 to reach 8 billion euros, decline of 37 percent, helped by an improved second quarter, when the fall in sales slowed to 31 percent, from a decline of 44 percent in the first quarter. The company said in a statement that it also returned to net profit in the second quarter of 214 million euros leaving behind the Q1 net loss. First half net loss was 195 million euros. The company added that leaving out the 308 million euros provision recognised in the first quarter to accelerate the integration of the store and online platforms, the group would have recorded a net profit of 39 million euros in the first half.
Commenting on the results, Inditex’s Executive Chairman, Pablo Isla, said: “The recovery and strong performance are due to the hard work, engagement and creativity of everyone in Inditex. I am particularly pleased with our online sales growth, which demonstrates the critical importance of our integrated store and online platform strategy. This is a cornerstone of our unique business model with three key pillars flexibility, digital integration and sustainability. Day by day this combination is proving its solidness”.
Inditex sees further positive progress in Q3
As many as 87 percent of the group’s stores were closed during the month of May, with business gradually returning to normal since. Inditex has currently managed to open 98 percent of its stores around the world. The group’s total sales were boosted by very strong online growth, which reached 74 percent year on year in the first six months of the fiscal year. Gross margin remained at 56.2 percent of sales, compared to 56.8 percent in 1H19.
The company added that third quarter continues to see a progressive return to normality, with online sales growing sharply and store sales recovering gradually. Store and online sales in local currencies between August 1 and September 6, 2020 were down 11 percent against a comparable of 8 percent growth during the same period of 2019.
As approved by the shareholders during the annual general meeting, Inditex said, on November 2, 2020, the company will pay an ordinary dividend of 0.35 euros per share from 2019 profits.