Inditex said its fully integrated model resulted in a very strong operating performance, with sales, EBITDA and net income reaching "historic highs" in 2023.
The company reported net sales growth of 10.4% to €35.95bn ($39.27bn), marking an increase of 14.1% on constant currency basis in FY23.
According to GlobalData's retail analyst Pippa Stephens, Inditex's superior incorporation of trends and wide demographic appeal allowed it to exhibit an enviable performance in FY2023/24, considering the economic challenges squeezing consumers' wallets in the later half of the year.
Stephens said: "The group remains focused on its physical proposition, with continued store refurbishments and openings allowing its store sales to grow by 7.9%. However, online regained its outperformance, increasing by 16%, supported by its incorporation of new technologies like augmented reality and strong customer engagement through social media.
"Planned investments over the next couple of years in logistical expansion will enable it to grow its online business even further, by making its processes even quicker and more streamlined."
Stephens further suggested that Inditex's next move should be to publish a full list of its suppliers, as Reuters reports is currently being requested by a group of investors, and is already standard practice at key competitors including H&M and Primark.
As well as reassuring investors, the move would also increase transparency and aid shopper perceptions, giving them greater confidence in the sustainability and ethics of Inditex's operations, Stephens highlighted.
Key results for Inditex in FY23
- 10.4% sales growth to €35.95bn, with an increase in both online and instore sales
- Gross profit increased 11.9% to €20.8bn, as gross margins increased to 57.8%
- EBITDA increased to 13.9% to €9.9bn
- Net income increased 30.3% to €5.4bn
Inditex noted "satisfactory" sales development both in stores and online. Online sales increased 16% to €9.1bn as the number of customer visits to its websites hit 6.5bn in 2023.
Geographically, store and online sales for Europe (excluding Spain) were up 48.7%, in Americas by 19.6%, Asia and Rest of World saw a 16.9% increase and Spain reported an increase of 14.8%.
The company's EBIT rose by 23.4% to €6.80bn from €5.52m same period last year and EBITDA increased 13.9% to €9.9bn in 2023.
Net income also saw an increase, rising 30.3% from €4.15m in FY22 to €5.40bn in FY23.
Inditex also highlighted that its inventory was 7% lower, as of 31 January 2024 compared to the same period in 2023. It attributed this to its "robust" operating performance and a normalisation in supply chain conditions compared to 2022.
Expansion and a return to Ukraine in 2024
Moving forward, Inditex foresees a 1.5% currency impact on sales at current exchange rates in 2024. For 2024, it expects a stable gross margin (+/-50 bps).
Inditex believes its flexible and responsive business, alongside "in-season proximity sourcing", puts it in a "unique market position" to respond rapidly to fashion trends.
The group announced plans to open new Zara and Massimo Dutti stores in 2024, as well as the first Bershka store in India.
As well as opening stores in Uzbekistan for the first time, Inditex will also reopen around 50 stores in Ukraine, starting on 1 April 2024.
Additionally, the company is implementing a two-year logistics expansion plan and will be investing €900m in 2024 and 2025. These investments will have the "highest standards" of sustainability and use the most up-to-date technology.
Inditex said the plan aims to strengthen its ability to take advantage of growth opportunities in the medium and long term at a global level.
In December 2023, Inditex reported that is net income had increased by a third to €4.1bn in the first nine months of 2023 as it saw a 'normalisation' of its supply chain for the Autumn/Winter 2023 season.
