LONDON – Inditex saw its net profit soar in the fiscal first quarter ended April 30 despite suspending operations in Russia and Ukraine due to the conflict in the region.
The fast fashion giant, parent of brands such as Zara, Massimo Dutti and Bershka, posted an 80% rise in profit year-on-year to 760 million euros, with strong performances in all regions, and in the United States in particular.
The company said it has made a provision of 216 million euros to cover all extraordinary costs related to the temporary closure of its operations in Ukraine and Russia. Shops in the area have been closed since late February.
The group said it would have made a net profit of 940 million euros without the closures.
Sales increased by 36% to 6.74 billion euros, which Inditex said was supported by a “strong recovery” in store traffic and a “good reception” for the latest collections from the seven brands.
China was the only market to underperform: some 67 stores were closed during the period due to COVID-19 restrictions. Inditex said the United States is now its second largest market after Spain, where it is headquartered.
Óscar García Maceiras, CEO of Inditex, said the results were the result of a “well-differentiated model that delivers good results. The strength and adaptability of the business model and the excellent performance of our creative, commercial and operations drive this differentiation forward, supported by a strategic focus on innovation, digitalization and sustainability.
Inditex said the second quarter started on a high note, with sales up 17% in constant currency between May 1 and June 5.
The company added that it was making “steady progress” in achieving its sustainability goals, with the ultimate goal of using cutting-edge technology to move “the textile industry, as a whole, towards circularity”. .
The company announced that it has signed a three-year agreement worth more than 100 million euros with Infinited Fiber Company, committing to buy 30% of future production of Infinna, a fiber created entirely from textile waste.
The project is part of Inditex’s Sustainability Hub, an open innovation platform created to promote and scale up innovation in sustainable materials, technologies, processes and solutions.
Shares of Inditex closed up 6.4% at 23.63 euros on Wednesday.
