Spanish multinational company Inditex, which owns popular clothing brand Zara, has announced impressive financial results for the year 2021. The company reported a net profit surge of 193% to reach €3.2 billion, while sales also saw a significant recovery, increasing by 36% year-on-year to reach €27.7 billion. Although sales were down 2% on a reported basis, they were up 3% on a currency-neutral basis compared to 2019. However, the company faced challenges in the fourth quarter of 2021 due to the impact of the Omicron variant, resulting in a loss of €400 million as a result of restrictions imposed in countries like Germany and Japan.

One of the key highlights for Inditex was the growth of its online revenue, which reached €7.5 billion and accounted for 25.5% of the group’s total sales. This marked a 14% increase in e-commerce for the company. Inditex also experienced significant improvements in profitability, with EBITDA rising 58% to €7.2 billion, EBIT jumping 184% to €4.3 billion, and pre-tax profit soaring 200% to €4.2 billion. Gross profit also saw a notable increase, rising 39% to €15.8 billion, with the gross margin reaching 57.1%, the highest it has been in six years. The company stated that all expense lines showed a favorable evolution, with operating expenses increasing by 26%, which was below the growth in sales.

The company’s performance in the new financial year has also been strong, with total sales up to March 13 seeing a 33% increase compared to 2021 and a healthy 21% growth compared to the pre-Covid period. However, Inditex may face challenges due to its decision to temporarily close all of its more than 500 stores in Russia.

Despite this setback, Inditex remains confident as its SS22 collections have been well-received by customers. Zara, the company’s flagship brand, experienced a sales increase of 39% compared to 2020. The company’s other smaller labels, including Pull&Bear, Massimo Dutti, Berhska, Stradivarius, and Oysho, also saw strong growth, with sales rising between 15% and 42%.

In terms of regional developments, the US has become Inditex’s largest individual country market, accounting for 17.5% of sales in 2021, compared to 13.5% in 2020. Spain accounted for 14.4% of sales, slightly down from 14.6% the previous year. Europe, excluding Spain, remained the company’s largest combined market, making up 48.4% of sales, with Asia and the rest of the world accounting for 19.7% of sales, a slight decrease from 23.2% in the previous year.

Overall, Inditex has demonstrated its resilience and ability to adapt to challenging market conditions, positioning itself for further growth in 2022. With the success of its online channels and strong performance across its brands, the company is well-positioned to navigate the ever-changing retail landscape.

Useful links:
Inditex Financial Statement
Reuters Article on Inditex Financials