Inditex still sees problems in global supply chains after posting higher-than-ever quarterly revenue

On October 31, Inditex closed the best quarter in its history in terms of profit and business volume. It earned 1.305 million euros with sales of 8.211 million. An evolution that he believes has been in a difficult environment, as he still sees dark clouds in his supply chains – albeit much less intense – and he no longer has Russian business.

Zara’s owner this Wednesday published results for the first nine months of the fiscal year, which differs from listed companies and ends on January 31, when sales end. In the year to October 31, in the midst of spiraling inflation, its turnover rose 19% to 23,055 million and profit rose 24% to 3,095 million euros.

This evolution includes an additional 14 million euros extraordinary charge to the 216 million euros it already recorded in the first quarter accounts due to the suspension of operations in Russia after the invasion of Ukraine. “Inditex estimates that this provision substantially covers the impact of the termination of the group’s activities in the Russian Federation,” it said in a report it sent to the National Securities Market Commission (CNMV). The Galician multinational sold its business in the country in October, although it has left the door open to a return at some point if conditions are met.

Start loosening your supplies

Beyond the numbers, Inditex gave hints about how the global situation is going. For example, no changes are indicated on the prices. A month ago, it announced that it was raising prices on some products to adjust margins. Now, in a conference call with analysts this Wednesday, he did not indicate any changes to this “progressive” increase. “It’s not everything, it’s by product family,” he assured investors.

He’s also back to talk about stocks. Three months ago, it already announced that it was replenishing its warehouses to avoid problems in the supply chain. And so it goes on, although the pressure seems to be starting to ease.

“Inditex has temporarily anticipated inventory records in 2022 to increase product availability amid possible supply chain tensions,” it explained in its results. “Inventory up 27% as of October 31, 2022.” However, “as of December 8, 2022, inventory levels show annual growth of 15%,” indicating that these problems are fading.

Other major textile multinationals have already said in recent weeks that their prices have hit the ceiling, despite inflation, precisely because they have had to dispose of high inventories they had to build up.

Inditex did not want to reveal to investors how prices will develop in the coming months or whether it sees more problems at global chains, and plans to do so in March when the fiscal year closes.

Yes, he broke other financial data, such as the fact that his cash position has increased to 9,980 million euros, although he guarantees that “the environment remains difficult”.

Source: El Diario





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