DIpil Das
[caption id="attachment_90384" align="aligncenter" width="700"]
Source: Company reports/Coresight Research[/caption]
1Q19 Results
Inditex reported 1Q19 revenues of €5.93 billion, lower than the consensus estimate of €6.09 billion and up 4.8% from the year-ago period. The company reported EPS of €0.24, up 10.3% from the year-ago period of €0.21, and even with the consensus estimate.
Operating expenses were tightly managed over the quarter; operating expense growth was 5% excluding new “IFRS 16 rules,” which changed the company’s accounting treatment of leases.
Management reported comparable store sales increased 5.0% in the first quarter, beating the consensus estimate of 4%.
The company reported that its store and online sales in local currencies grew 9.5% from May 1 to June 7 (following the end of 1Q19) and 6.5% from February 1 to June 7.
The company stated that it continues its rollout of its global, integrated store and online platform and launched online in 9 new markets. Zara launched online sales in Brazil in March 2019, and in May 2019, Zara launched online sales in Saudi Arabia, United Arab Emirates, Lebanon, Egypt, Morocco, Indonesia, Serbia and Israel. Zara plans to launch online for its autumn/winter campaign in South Africa, Qatar, Kuwait, Bahrain, Oman, Jordan, Colombia, Philippines and Ukraine.
Management commented that sales in the second half of the quarter were adversely impacted by weather in a number of markets.
During the first quarter, Inditex opened stores in 23 markets, and operated 7,447 stores at the end of the quarter as shown below. Among the selected high-profile store opening highlights: Zara opened a store in Hudson Yards in New York, one of the world’s highest profile retail developments, one in Rue Jean de Rouffe in Cannes France, and in the Time World Mall in Daejeon South Korea.
[caption id="attachment_90385" align="aligncenter" width="700"]
Source: Company reports[/caption]
Management reported its strategy is to have developed a fully integrated, fully digital, and fully sustainable store and online model equipped with the latest technology by 2020. The company has set up a Sustainability Committee within its Board of Directors whose mission it is to oversee its sustainability strategy and policies and supervise the supply chain monitoring effort and the relationship with stakeholders. The company signed a €3.5 million agreement with the Massachusetts Institute of Technology covering the promotion of sustainability-driven research which includes new recycling techniques.
Inditex distributed €32 million to 92,000 employees in April 2019 as part of its employees with at least two years of service in its stores, manufacturing facilities, logistics platforms, chains and subsidiaries as part of its profit-sharing plan. In total, Inditex has distributed €153 million to its employees since it introduced the profit-sharing plan in 2015
Outlook
Management projects comparable sales growth of 4%-6% in FY2019.
Source: Company reports/Coresight Research[/caption]
1Q19 Results
Inditex reported 1Q19 revenues of €5.93 billion, lower than the consensus estimate of €6.09 billion and up 4.8% from the year-ago period. The company reported EPS of €0.24, up 10.3% from the year-ago period of €0.21, and even with the consensus estimate.
Operating expenses were tightly managed over the quarter; operating expense growth was 5% excluding new “IFRS 16 rules,” which changed the company’s accounting treatment of leases.
Management reported comparable store sales increased 5.0% in the first quarter, beating the consensus estimate of 4%.
The company reported that its store and online sales in local currencies grew 9.5% from May 1 to June 7 (following the end of 1Q19) and 6.5% from February 1 to June 7.
The company stated that it continues its rollout of its global, integrated store and online platform and launched online in 9 new markets. Zara launched online sales in Brazil in March 2019, and in May 2019, Zara launched online sales in Saudi Arabia, United Arab Emirates, Lebanon, Egypt, Morocco, Indonesia, Serbia and Israel. Zara plans to launch online for its autumn/winter campaign in South Africa, Qatar, Kuwait, Bahrain, Oman, Jordan, Colombia, Philippines and Ukraine.
Management commented that sales in the second half of the quarter were adversely impacted by weather in a number of markets.
During the first quarter, Inditex opened stores in 23 markets, and operated 7,447 stores at the end of the quarter as shown below. Among the selected high-profile store opening highlights: Zara opened a store in Hudson Yards in New York, one of the world’s highest profile retail developments, one in Rue Jean de Rouffe in Cannes France, and in the Time World Mall in Daejeon South Korea.
[caption id="attachment_90385" align="aligncenter" width="700"] Source: Company reports[/caption]
Management reported its strategy is to have developed a fully integrated, fully digital, and fully sustainable store and online model equipped with the latest technology by 2020. The company has set up a Sustainability Committee within its Board of Directors whose mission it is to oversee its sustainability strategy and policies and supervise the supply chain monitoring effort and the relationship with stakeholders. The company signed a €3.5 million agreement with the Massachusetts Institute of Technology covering the promotion of sustainability-driven research which includes new recycling techniques.
Inditex distributed €32 million to 92,000 employees in April 2019 as part of its employees with at least two years of service in its stores, manufacturing facilities, logistics platforms, chains and subsidiaries as part of its profit-sharing plan. In total, Inditex has distributed €153 million to its employees since it introduced the profit-sharing plan in 2015
Outlook
Management projects comparable sales growth of 4%-6% in FY2019.