Inditex closed the 2020 financial year, the most complicated it has had to go through in its history, with a net profit of € 1,106 million, which is a 70% withdrawal compared to the previous year’s figures. A year marked by a pandemic, the closure of stores and time restrictions and a higher demand for the online channel. All this was mentioned in the profit and loss account of the Galician textile group, despite which it managed to maintain a positive result. Yes, this is it the lowest since 2006. The company’s shares fell more than 1% at the beginning of the trading session, moderating the decline in the middle of the session and even rising slightly.
2020 will go down in the company’s history because it is the first in which its revenues are reduced 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 back. If in the third it managed to amortize the decrease to 13.5%, in the last year, when the restrictions were accentuated again, the decline was of almost 25%, when it invoiced 6.317 million. The profit during this period was 435 million, 53% less. According to the company, on January 31 this year, at the end of the fiscal year, had 30% of its physical stores completely closed, when at the end of the third quarter this percentage was 8%. Throughout the year, sales hours were reduced by 25.5%, and 100% of its stores suffered closures or limitations 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 increase online sale. It did this with 77%, up to 6,612 million euros, representing 32.4% of total sales, which far exceeded the target set for this channel to represent 25% of turnover in 2022. In 2019 , this percentage was 14%. The group also points to a 50% increase in visits to its online stores.
“Inditex comes out stronger from this difficult year “, says the executive president Pablo Isla in the results report. “The digital transformation strategy launched in 2012 through the integrated platform of stores and online proved to be the right one,” he added, concluding that Inditex is today an even stronger company than two years ago, with a unique business model. and a flexible and efficient global trading platform, which puts us in an excellent position for the future ”.
Payment of dividends
What increases the textile material is the dividend. Inditex returns to its policy of dedicating 60% of its profits to shareholders’ remuneration and will distribute 0.70 cents per share billed in fiscal year 2020. It is double what it distributed last year, when it kept the dividend in the air until the meeting of summer of shareholders in the face of uncertainty triggered by coronavirus. In this case, it is an ordinary dividend of 0.22 euros and an extraordinary one of 0.48 euros, which will be paid in equal payments of 0.35 euros in May and November.
However, it postpones the payment of the remaining 0.30 euros for the 1 euro dividend employed for 2019, 2020 and 2021-2022, as reported.
In terms of other financial variables, Inditex closed the year with a gross margin of 11,390 million or 55.8% in sales, one tenth less than in the previous year and a decrease in ebitda of 41% to 4,552 million. .
All these indicators, as well as the sales and profit figure, are below the forecasts collected by Bloomberg 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 2020 of about 21,000 million . According to analysts’ calculations, Inditex will not return to the 28,292 million it invoiced in 2019 until 2023.
The beginning of the year
In addition to the 2020 balance, Inditex also gave the first indications of the beginning of February of the financial year 2021. This explains the fact that the spring-summer collections “were very well received by our customers” and that last month an average of 21% of its stores remained closed. As of March 8, this percentage had dropped to 15%.
In-store and online sales in the first week of this month fell by 4%. With the exception of the top five markets with the largest number of closed stores, Germany, Brazil, Greece, Portugal and the United Kingdom, sales increased by 2%, according to the company. Inditex estimates that on April 12, “practically” 100% of its stores will be open.