Inditex to Report 9-Month Results for Fiscal 2024

By Andrea Figueras

Sales Outlook

Inditex, the Spanish fashion powerhouse that owns popular brands such as Zara, Bershka, and Massimo Dutti, is set to announce its results for the first nine months of fiscal 2024 on Wednesday. Market analysts predict that the company's sales in the third quarter will reach €8.88 billion ($9.56 billion), based on a FactSet poll. This would bring the total sales for the year up to €25.73 billion, surpassing the €23.06 billion achieved during the same period last fiscal year.

Continued Growth

Inditex's ongoing success can be attributed to several factors, including its compelling fashion offerings, efficient utilization of space, and an integrated business model. RBC Capital Markets analyst Richard Chamberlain emphasized these strengths in a note to clients, affirming that Inditex's impressive sales performance is expected to persist throughout the latter half of the year.

Stay tuned for the official results, which will provide further insights into Inditex's resilient position in the fashion industry.

Earnings

The Spanish fashion giant is set to disclose earnings before interest and taxes (EBIT) of EUR1.97 billion for the three months ending on October 31, as per FactSet data. This would bring the EBIT for the February-October period to EUR5.13 billion, signifying an increase from EUR4.18 billion in the same period last year. Analysts from Citi stated in a research note that they anticipate another profitable quarter for Inditex, with its strong revenue growth translating into impressive profits. The analysts also predict a company EBIT margin of 22%.

Factors to Consider

Weather

According to analysts at Bernstein, the main challenge faced by Inditex during the third quarter was the unseasonably warm weather in September and October. These months saw temperatures that were 2 degrees higher than the five-year average, which hampered the transition of consumers from summer to fall and winter clothing. Consequently, October experienced a dip in performance. However, despite the adverse weather conditions, the analysts affirm that Inditex is expected to deliver a solid quarter, even with some slowdown during this three-month period.

Pricing Concerns for Retailers in the Coming Year

Deutsche Bank analyst, Adam Cochrane, has highlighted the need for greater clarity regarding pricing plans from companies in the upcoming year. In a note to clients, Cochrane points out that while some retail firms have already raised prices in response to inflation, there is now a potential risk of deflationary impact on their top line. Furthermore, retailers may face additional challenges in the form of interest-rate pressure on consumer spending and employment, as well as wider geopolitical uncertainty, adds DB.