The company's profit rose 54% to $1.2 million, beating analysts' expectations of $980 million.
Spanish Inditex Group, the largest fashion retailer in the global market, reported financial results for the first quarter of 2023. The company's profit rose 54% to $1.2 million, beating analysts' expectations of $980 million.
Sales of the owner of Zara rose by 13% to 7.6 billion euros in the first quarter. Analysts note that the fashion giant remains competitive with higher product prices. The capitalization of Inditex Group exceeded 100 billion euros.
The company's gross profit rose 14 percent to 4.6 billion euros and gross margin reached 60.5 percent, up 34 bps. EBITDA for the quarter rose 14 percent to 2.2 billion euros, EBIT increased 43 percent to 1.5 billion euros.
1.6 billion euros for expansionThe company, which operates the Zara, Bershka, Stradivarius, Oysho, Pull&Bear and Massimo Dutti retail chains, plans to invest another 1.6 billion euros in store expansion in 2023. The chain's space is expected to grow by 3 percent.
"We remember fr om the global financial crisis that when consumers are under pressure, as they are currently, it is the 'new products' in a fashion that sell best, as people prioritize spending on the 'necessary' items that will make the biggest difference to their closet," commented Anne Critchlow, an analyst at Societe Generale.
Part of a strategyInditex Group is building revenue and profits by maintaining high prices in some overseas markets. Thus, in particular, in the U.S., Mexico and Saudi Arabia, the products of Zara and other brands are almost twice as expensive as in Spain.
In the spring of 2022, Inditex Group gave up on continuing to operate in the Russian market, wh ere it had about 550 stores. Late last year, the company sold its assets in the country to Daher Group in the Middle East and left the market entirely. Despite this, Inditex managed to show strong financial performance and ended the year with a profit.
Inditex plans to open about 30 additional stores in the U.S. within two years. Inditex opened stores in 17 markets in the first quarter of 2023 and operated 5,800 stores at the end of the period.