Inditex closed the financial year 2020, the most complicated it has had in its history, with a net profit of 1,106 million euros, which equates to a retracement of 70% compared to last year’s figures. A year marked by the pandemic, store closures and time constraints, and increased demand for the online channel. All ingredients that were noted in the income statement of the Galician textile group, despite the fact that it managed to maintain the positive result. Yes, this is it lowest since 2006The company’s stock fell above 1% at the start of the trading session, moderating the mid-session decline and even growing slightly.
2020 will go down in the company’s history as it will be the first to reduce income compared to the previous year. Inditex billed 20,402 million, 28% less, with the burden of the first half of the year and a fourth quarter in which the recovery in sales took a step backwards. If it had managed to absorb the fall to 13.5% in the third year, in the last year of the year, when restrictions were tightened again, the fall was almost 25%, when it charged 6,317 million. Profit in this period was 435 million, 53% less. According to the company, on January 31 of this year, the end of the fiscal year, 30% of its physical stores were completely closed, while this percentage was 8% at the end of the third quarter. During the year, sales hours were reduced by 25.5% and 100% of stores experienced closures or restrictions at some point during the year. January 31st its network of stores was 6,829 units, 640 less than a year earlier.
Something that was partially offset by the growth of the online salesIt did so at 77% to 6,612 million euros, representing 32.4% of total sales, well ahead of this channel’s target of 25% of sales by 2022. In 2019, that percentage was 14%. The group also highlights a 50% growth in the number of visits to its virtual stores.
Inditex comes out stronger of this difficult year, ”said Executive President Pablo Isla in the results report. “The digital transformation strategy launched in 2012 through the integrated platform of stores and online has proven to be the right one,” he added, concluding that Inditex today “is an even stronger company than two years ago, with a unique business model and a flexible and efficient global commercial platform, which puts us in an excellent position for the future ”.
Dividend payment
What does increase the textile is the dividend. Inditex is returning to its policy of allocating 60% of the profit to the shareholder remuneration and will pay out 0.70 cents per share charged to the 2020 financial year. It’s double what it paid out last year, when it kept the dividend in the air until its summer shareholders’ meeting in light of the uncertainty caused by the coronavirus. In this case, it concerns an ordinary dividend of EUR 0.22 and an extraordinary dividend of EUR 0.48, which will be distributed in an equal amount of EUR 0.35 in May and November.
However, it deferred payment of the $ 0.30 remaining for the $ 1 dividend committed for the years 2019, 2020 and 2021 to 2022, as reported.
Regarding other financial variables, Inditex ended the year with a gross margin of 11,390 million, or 55.8% on sales, one-tenth less than in the previous year, and with a 41% decrease in EBITDA to 4,552 million.
All of these indicators, as well as the sales and profit figures, are below the forecasts that Bloomberg collected in recent days, which calculated a net result of about 1,300 and 1,400 million euros for the end of the year, and total revenues for the year 2020. about 21,000 million. According to analysts’ calculations, Inditex will not return to the 28,292 million it billed in 2019 until the year 2023.
Beginning of the year
In addition to the 2020 balance sheet, Inditex has also provided initial indications of the start of its 2021 fiscal year in February. It explains that the spring-summer collections were “very well received by our customers”, with an average of 21% of stores remained closed. As of March 8, this percentage had fallen to 15%.
In-store and online sales in the first week of this month registered a 4% decline. Excluding the top five markets with the highest number of closed stores, Germany, Brazil, Greece, Portugal and the United Kingdom, sales grew by 2%, according to the company. Inditex estimates that ‘practically’ 100% of its stores will be open on April 12.