Inditex Q1 net profit beats expectations

Zara and Massimo Dutti owner Inditex posted a jump in first-quarter sales and profit on Wednesday as it said its spring/summer collection has been well received.

Sales rose 13% over the quarter to €7.6bn, with net profit up 54% to €1.2bn, coming in above analysts' expectations of €980m.

Inditex said sales were positive in all geographical areas and in all concepts.

"In 1Q2023, Inditex continued with a very robust operating performance due to the creativity of the teams and the strong execution of the fully integrated business model," it said. "The spring/summer collections have been very well received by our customers."

Inditex also said that between 1 May and 4 June, store and online sales rose 16% at constant currency, versus the same period a year earlier.

At 1105 BST, the shares were up 5.9% at €33.68.

Victoria Scholar, head of investment at Interactive Investor, said Inditex "is successfully navigating the challenges of a sluggish global growth backdrop and the cost-of-living crisis".

She continued: "Inditex’s competitive pricing continues to draw in customers at a time when many shoppers are refraining from more expensive purchases. Inditex has managed to pass on some of its additional cost pressures, including loftier wage bills to consumers in terms of higher prices without denting demand, allowing the fashion group to preserve its gross margin at 60.5%.

"Inditex also started charging online shoppers for returns, which rather than deterring purchases, has provided some financial support, and may actually have encouraged customers to add more items to each shopping basket in order to maximise the small levy. Zara’s in-store technology such as its self-checkout booths have also improved the customer experience, expedited the shopping experience, and minimised queuing times."