Inditex (ITX) Q1 2024 earnings summary

Executive summary

• Achieved robust operating performance in 1Q2024, driven by strong execution, creativity, and well-received Spring/Summer collections.

• Net income increased 10.8% to €1.3 billion, with continued strong sales growth and healthy financial condition.

• Store and online sales in constant currency grew 12% between May 1 and June 3, 2024, indicating strong momentum into 2Q2024.

• Opened stores in 28 markets, including first entry into Uzbekistan and resumption of operations in Ukraine.

Financial highlights

• Net sales rose 7.1% year-over-year to €8.2 billion; constant currency sales up 10.6%.

• Gross profit increased 7.3% to €4.9 billion, with a gross margin of 60.6% (+13bps year-over-year).

• EBITDA grew 8% to €2.4 billion; EBIT up 10.3% to €1.6 billion.

• Operating expenses grew 6.4%, below sales growth, reflecting tight cost control.

• Inventory as of April 13 was 3% lower year-over-year and considered high quality.

Outlook and guidance

• Expects stable gross margin in 2024 (within ±50bps); forecasts a -2% currency impact on sales.

• Growth of annual gross space projected at around 5% from 2024 to 2026, with positive space contribution and strong online sales.

• Ordinary capital expenditure for 2024 estimated at €1.8 billion, focused on commercial space optimization and online platform improvements.

• Extraordinary logistics investment of €900 million per year planned for 2024 and 2025, with projects on track to be operational by end of 2025.