Thu. Jul 18th, 2019

Inditex lowers the growth rate of its sales and the share falls by 4% | Companies

Inditex lowers the growth rate of its sales and the share falls by 4% | Companies



Inditex, the textile group founded by Amancio Ortega, closed fiscal year 2018 with a new record of sales and profits. The company based in Arteixo (La Coruña, Galicia) recorded revenues of 26,145 million euros, 3% more than a year earlier, and profits of 3,444 euros, 2% more than the amount registered in the year 2017. These figures are below the forecasts drawn by the analysts (around 3,480 million), and the action has started the day with a drop of 4% on the stock market to 25.04 euros. Far, even so, from the lows of the year.

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Thus, the main company of the world textile sector continues without touching the ceiling, although the rate of growth itself begins to suffer. The sales progress of 3% registered during 2018 represents the lowest historical increase for the group, something that had been anticipated during the last periods. Until the third quarter of the year sales had also grown by 3%, a rate that has finally remained unchanged. The advance recorded during the last year is below the growth of 4.8% that the owner of Zara or Massimo Dutti had registered in 2013, in full crisis of consumption in Spain, figure that until now represented the lowest annual sales increase. To overcome it, Inditex should have improved its sales by 10% in the last quarter and having reached at least 8,100 million. Finally, the income in the last three months of its fiscal year was 7,708 million.

In 2018, the textile sector has been especially penalized, in the case of Inditex also because of doubts about its ability to continue generating sales growth and profits as it has been up to now. The firm was left during that year about 20,000 million euros of market capitalization.

The company, however, will improve the shareholder's compensation. In parallel to the announcement of its results, Inditex has also explained that it will increase by 17% the dividend for the year just ended, reaching 0.88 euros per share, 0.66 as an ordinary dividend and 0.22 as an extraordinary dividend. The textile group has also anticipated that it will change the distribution model for the next three years, increasing ordinary payments between 50% and 60%, and will propose an extraordinary dividend of one euro per share to be distributed from the 2018 fiscal years. , 2019 and 2020.

On the other hand, EBITDA improved by 3% to 5,457 million, and gross margin stood at 14,816 million, 4% higher than the previous year, representing 56.7% of sales. Its network of stores ended the year 2018, ended on January 31 of this year, with 7,490 points of sale, only 15 more than at the end of the previous year, which also means the lower historical increase. Its commercial area grew by 5% to 4.9 million square meters.

The figures for 2018 are not yet affected by the application of accounting regulations NIF 16, which obliges companies to include rental expenses in the balance sheet. Inditex explains that it will do so from the year already in progress, and anticipates that the liabilities for leases will be between 6,500 and 6,900 million euros, while the benefit will grow between 2% and 4%.

With all this, the owner company culminates a historical exercise, with records of sales and benefits and milestones such as the opening of its global Zara website, which allows to sell to 106 countries, or the group's intention to sell online all over the world, with all its brands, in the year 2020, within its ambitious strategy of integration of physical and online stocks. Sales through its virtual channel grew 27% during the year and already represent about 3,200 million euros, 12% of total turnover. This percentage increases to 14% in markets where this type of sale is available.

Forecasts

Looking ahead to 2019, the company presided by Pablo Isla expects an increase in comparable sales of between 4% and 6% in 2019. In 2018 it was 4%. It also estimates a gross growth of space in key locations of between 5% and 6%, and around 50 net openings, with 300 new stores and the absorption of 250, with an investment of 1,400 million, 200 million less than the effected in 2018.

In addition, it will launch the online sale of Zara in Brazil in March. In May it will do so in Dubai, Saudi Arabia, Egypt, United Arab Emirates, Indonesia, Israel, Lebanon, Morocco and Serbia

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