Inditex, the global fashion retail giant, is seeing a remarkable bounce-back in its business following the Covid-19 pandemic. The company has announced that its sales, EBITDA, and net income for the second quarter of its financial year have reached unprecedented levels. Moreover, Inditex’s AW21 collections have been met with great enthusiasm from customers, leading to a 22% increase in store and online sales between August 1 and September 9 compared to the same period in 2020, and a 9% increase compared to the same period in 2019.

At present, 99% of Inditex’s stores are open and sales are gradually returning to normal levels. The company is also witnessing continuous growth in online sales. To further drive sales expansion, Inditex has implemented new initiatives, such as the launch of Zara Athleticz, a sports collection for Zara Man, both online and in selected stores. The company plans to invest approximately €900 million annually between 2020 and 2022, with a specific emphasis on digital investments amounting to €1 billion over the next three years.

Looking back at its most recent reporting period, Inditex achieved a 7% growth in constant currency sales during Q2 compared to two years ago. Physical store sales improved during the first half of the year while online sales continued to soar. In particular, online sales increased by an impressive 36% compared to 2020 and a staggering 137% compared to two years ago, reflecting the significant investments made by the company in its e-commerce capabilities.

Overall, Inditex reported a total net sales figure of €11.9 billion for the first half of the year, representing a remarkable year-on-year increase of 49%. Gross profit reached €6.9 billion, also experiencing a substantial growth of 53% compared to the previous year, with a gross margin of 57.9%. Additionally, net income witnessed a significant rise, reaching €1.3 billion, compared to a loss of €195 million in the previous year.

The company’s migration to the Inditex Open Platform (IOP) is nearing completion, which will further augment its digital aspirations and contribute to a fully integrated, digitalized, and sustainable business model. Inditex’s recently released collections, including both AW21 and SS21 offerings, have received positive feedback from consumers. The company’s investments in its physical stores and its efforts to differentiate its retail spaces have played a crucial role in ensuring that these collections reach a wide customer base.

Zara remains Inditex’s largest brand chain, with sales amounting to €8.488 billion in the first half of the year. Other brands in Inditex’s portfolio, namely Pull&Bear, Massimo Dutti, Bershka, Stradivarius, Oysho, and Uterqüe, have also witnessed sales growth.

Harry Barnick, an analyst at Third Bridge, has lauded Inditex’s performance, stating that the company is emerging as an early winner in the post-Covid retail world. Barnick specifically highlighted Zara as the star of Inditex’s brand portfolio, commending its ability to set trends rather than follow them. He also mentioned that Inditex has maintained robust gross margins by reducing discounting and successfully negotiating cancellations of orders with suppliers to avoid heavy end-of-season sales discounts.

Useful links:
1. Inditex H1 Profit Soars to Historic High
2. Official Website of Inditex