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Inditex earned €760M (+80%) in 1Q 2022… despite the fact that its online sales fell by 6%

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Although last year Inditex announced overwhelming results in its first quarter of 2021, with an increase in total sales of almost 50%, this time it has broken records again. The Spanish textile giant has won nothing more and nothing less than 760 million euros during your first fiscal quarter of 2022 (February to April). This supposes a 80% net profit increase compared to the same period of the previous year.

Inditex’s total sales increase by 36%

The sales totals of the group to which brands such as Zara, Massimo Dutti or Pull&Bear belong have much to do with these good results of the company, since they have reached 6,742 million euros (36% more than a year ago). Of course, when assessing this great growth in results, we must not forget the effect derived from the sale and closing of physical stores and the benefits that this entails, since in one year Inditex has closed 335 storeskeeping a total of 6,423 worldwide.

However, despite this increase in sales, the online channel has been hit by the recovery of face-to-face activity, decreasing eCommerce sales by 6%. This fact contrasts with the data revealed during the equivalent exercise the previous year, when online sales experienced a growth of 67%.

Online sales had begun to grow rapidly before the pandemic, but confinement was the definitive boom, shooting it up 50%. Now, Inditex relates the return to “normality” with the decrease in this demand. In line with this news, Inditex has announced its intentions to ensure that online sales account for more than 30% of its total sales in 2024.

Looking ahead to the next quarterly results, the company highlights that “the spring/summer collections have been very well received by our customers. Store and online sales at constant exchange rates between May 1 and June 5, 2022 have grown by 17% over the record period of 2021 (+13% in the last two weeks over the same period of 2021) ».

The future prospects of the textile giant

Among the three strategic priorities that the company highlights in the report itself are the digitization and full integration of the physical and online channels. To strengthen its global expansion and growth, Inditex looks to the future from the eyes of ecommerce despite the bump in this first quarter.

On the other hand, the third pillar on which the brand intends to consolidate its success and maximize its organic growth is the sustainability. The estimated investment that the company will make on these three initiatives will be around 1,100 million euros.

Sustainability, the key to Inditex’s strategy

Sustainability is not a thing of a day and loose actions do not help the planet or the companies that, let’s be honest, also seek their own benefit after these implications. That is why Inditex has been working on strategies of this type for some time now, covering different areas such as: sustainable supply, research into production processes that reduce water consumption, design of eco-efficient stores, etc. The report itself highlights that “the group is in the on track to meet all sustainability roadmap targets set for 2022, 2023 and 2025«.

Within Inditex’s Sustainability Innovation Hub, the group’s open innovation platform through which they work with institutions, startups, technology centers, etc, to develop sustainable initiatives, they wanted to highlight the collaboration, since May this year, with Infinited Fiber Company. Through this agreement they seek promote innovative technologies aimed at textile circularity.

Inditex has committed to, over three years, investing 100 million euros in the purchase of 30% of the production volume of Infinna, a textile fiber produced by Infinited Fiber Company and made from recycled clothing. This process would begin in 2024, although Zara has already launched a capsule collection introducing this fiber.

Image: Depositphotos

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