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Inditex reports higher profit for FY'18 boosted by online sales


Inditex reports higher profit for FY'18 boosted by online sales

Industria de Diseño Textil SA, owner of the Zara clothing brand, on March 13 reported a slight increase in EPS for fiscal 2018 boosted by higher sales across all regions and online, and said it estimates like-for-like sales growth of 4%-6% in fiscal 2019.

For the 12 months ended Jan. 31, EPS was €1.11 compared to €1.08 in the previous fiscal year. The Spanish company was projected to report EPS of €1.12 according to analyst consensus estimates compiled by S&P Global Market Intelligence.

In early trading on the Madrid Stock Exchange, Inditex shares were down 5.8% at 24.74.

Net sales rose 3% to 26.15 billion from the 25.34 billion reported in fiscal 2017. Like-for-like sales rose 4% across all geographic areas, while online sales jumped 27% to 3.2 billion, Inditex said in a statement. Net income rose 2% to 3.44 billion from €3.37 billion.

Inditex, one of the world's biggest clothing retailers, owns several well-known brands including Pull&Bear, Massimo Dutti and Bershka.

"Our business model allows a strong development of our online sales with same-day delivery in metropolis and next-day as a global standard," said CEO Pablo Isla de Tejera in a call with analysts following the results. He added that all Inditex brands would "offer online sales in any market in the world by 2020. We'll want to make our fashion collections available to all our customers wherever they are."

The company plans to launch Zara in Brazil on March 20. In May, Zara will also launch in Dubai, Egypt, Indonesia, Israel, Lebanon, Morocco, Saudi Arabia, Serbia and the United Arab Emirates.

Inditex said its board would propose an increase of the ordinary dividend payout to 60% from 50%, and a further total bonus dividend of 1 per share to be paid for the years 2018, 2019 and 2020. The total dividend for fiscal 2018 will be 88 Euro cents, representing an increase of 17%, which is made up of an ordinary dividend of 66 cents and a bonus dividend of 22 cents.

Zara's net sales in 2018 rose to €18.02 billion from €17.45 billion in 2017, while Pull&Bear reported an increase in net sales to €1.86 billion from €1.75 billion.

Inditex, which operates an integrated store and online model and whose management is known for keeping a tight lid on costs, said operating expenses grew 4% over the year, mainly as a result of the growth in sales and new retail space added. Ordinary capital expenditure for fiscal 2018 amounted to €1.5 billion, 2% lower than the previous year.

"We now have a lower capital expenditure requirement for expansion," said Isla de Tejera. "Ordinary capital expenditure for 2019 will be around €1.4 billion. For 2019, we expect gross new space in prime locations of around 5% to 6%. Gross openings should be at around 300 stores."