Release Date: December 11, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Sales in custom currency grew 10.5% in the first nine months of 2024, with net sales increasing by 7.1% to EUR27.4 billion.
- Profit before taxes rose by 9.9% to EUR5.8 billion, and net income increased by 8.5% to EUR4.4 billion.
- The company generated significant free cash flow, enhancing its net cash position to EUR11.8 billion.
- Store and online sales in constant currency grew by 9% between November 1 and December 9, 2024.
- Inditex continues to expand globally, opening stores in 45 different markets and rolling out new concepts in new locations.
Negative Points
- The company faced a negative currency impact on sales due to the strength of the euro and depreciation of the Brazilian real and Mexican peso.
- Operating expenses increased, although they were managed to grow below sales growth.
- The gross margin was affected by currency fluctuations, with a potential minus 3% currency impact on sales for 2024.
- The competitive environment in the fashion industry remains challenging, impacting promotional strategies and gross margins.
- The company is facing headwinds in external sourcing, which could affect future gross margins.
Q & A Highlights
Q: Can you discuss the impact of the recent flooding in Spain on sales and logistics?
A: Marcos Lopez Garcia, Director - Capital Markets, stated that the impact was very limited, with only three stores affected, which are now back in operation. There was no significant impact on sales or logistics.
Q: How is the competitive environment affecting your gross margin and sales?
A: Marcos Lopez Garcia noted that sales growth in constant currency was strong at 10.5%, despite a negative currency impact due to the euro's strength. The gross margin remains stable, and costs are tightly controlled, resulting in high margins across the P&L.
Q: Has the online sales mix increased, and what are the trends in click and collect versus home delivery?
A: Marcos Lopez Garcia confirmed that both store and online sales are growing, with online sales slightly outpacing store sales. Last year, online sales were 24% of total sales, and this trend continues.
Q: Are you targeting the younger market with offerings like Lefties and the Z3d collection?
A: Marcos Lopez Garcia mentioned that Inditex sees opportunities across all segments, not just the younger market. The company is making progress in all areas and is satisfied with the performance of its concepts.
Q: What is the strategy behind the new standalone Zara Man stores and the Apartment concept?
A: Oscar Garcia Maceiras Gonzalez, CEO, explained that these initiatives are part of a broader strategy to enhance customer experience and optimize store presence. The standalone Zara Man stores and the Apartment concept offer curated spaces and have received positive feedback.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
