Inditex does well in Madrid after accounts above estimates, likes solid margins

(Il Sole 24 Ore Radiocor) - A counter-trend session on the Madrid Stock Exchange (the Ibex closed down 0.5%) for Inditex (+0.53% to €52m74), the Spanish fashion group that controls Zara, Bershka, Massimo Dutti and Oysho, among others, after the 2025 accounts above estimates, with the highest ever profit at EUR 6.22 billion (+6%), revenues up to EUR 39.9 billion (+3.2%, +7% at constant exchange rates) and the proposed dividend of EUR 1.75 per share, which includes an extraordinary coupon of EUR 0.55. The share price in the course of the session had gained about 3 percentage points.

"The stock is doing better than the market as its annual results have been reassuring," Berenberg's experts explain, pointing out that "in 2025 Inditex continued to post a solid operating performance, the innovation, diversification and flexibility of the integrated model continued to support steady sales growth and sustained profitability." According to Deutsche Bank, the stock's performance is 'better than expected', especially as it has 'underperformed in recent weeks due to investor fears of weakening trading activity, which we believe is already largely priced in. While it is surprising that Inditex has experienced a period of weakness for two consecutive years, we believe it is likely to maintain sales growth despite a more difficult comparison for the rest of the year'.

Looking at the numbers, gross profit increased by 3.9% to EUR 23.2 billion, while the gross margin reached 58.3%. Ebitda grew by 5% to EUR 11.3 billion, while Ebit rose by 5.9% to EUR 8 billion. "These results reflect the group's ability to honour the trust that millions of customers place in our eight business formats every day. Connecting with them, understanding their desires and offering the best product and differentiated experience are at the heart of our long-term growth expectations," said CEO, Oscar Garcia Maceiras.

Analysts particularly appreciated the 'very solid gross margin and positive stock positioning' and the fact that 'profitability is improving thanks to progress in the shop and logistics strategy', as underlined by Citi's experts, who confirm the 'buy' with a price target of EUR 63. Looking ahead, the group 'remains strongly committed to profitable growth, with an increase in physical and online sales space'. To continue to support long-term growth, the group anticipates "an ordinary capital expenditure of approximately EUR 2.3 billion in 2026. This investment will be mainly dedicated to optimising retail space, technology integration and improving online platforms'.

For Deutsche Bank's experts, "the outlook is relatively limited at this stage, with Inditex forecasting a 5% increase in gross new floor space through shop openings/expansion, which implies a positive contribution. The negative exchange rate impact is expected to be about 1% on sales. Gross margin is expected to remain unchanged from the previous year.