Inditex faces its weakest quarter blowing hot and cold, by analysts. The Spanish group, which will present its quarterly results next Wednesday, would improve its rate of growth but would continue to shrink its margin, according to experts. The reason? The comparable base and the favorable impact of exchange rates.
The first quarter is traditionally the weakest for Inditex, both in sales and in profit. In 2018, the group billed 5,654 million euros in this period, compared to the more than 6,000 million in the second and third quarters, and the 7,708 million of the fourth quarter.
The same goes for the benefit: Inditex earned 668 million in the first quarter of 2018, compared to 741 million in the second quarter and more than one billion in the third and fourth quarter. The margin, however, is relatively high because, although the period covers one month of sales (January), the items of the winter season have an average price higher than those of the summer.
The first quarter of the year tends to be the weakest one for Inditex's results
In this sense, last year Inditex recorded a gross margin on sales of 58.9% in the first quarter, above the 54.7% of the second and 53.6% of the fourth quarter. The quarter with the most margin is the third, since the winter campaign is sold and does not include a period of sales.
For the first quarter of this year, the analysts of Credit Suisse anticipate that the deterioration of the margins will continue, but that both the ebit and the invoicing will evolve positively due to the favorable conditions of the exchange rates "and the mix of channels".
Specifically, the experts contemplate a sales growth of 7.5% and an ebit of 908 million euros, 6.6% more than in the same period of the previous year. On the other hand, for the year as a whole, analysts have revised downwards their forecasts of comparable growth, up to 3.5%, due to the impact of the new accounting regulations.
Renta 4 anticipates a sales increase of 8.3% in the first quarter, the highest since the second quarter of 2017
From Thomson Reuters, meanwhile, anticipate a 7.9% rise in sales for the first quarter, while Renta 4 forecasts an increase of 8.3%, which would be its maximum since the second quarter of 2017, when advanced 9.2%. Analysts explain that in 2018 the comparative effect was "demanding" and the appreciation of the euro had "a very high negative impact".
Inditex is immersed in a profound process of transformation that involves adapting its business model and promoting its digitalization. The company, which plans to sell online all over the world with all its chains in 2020, has been adjusting its store network since 2012 and has made the "fully integrated model" its mantra for years.
Within the framework of this strategic plan, the company has proposed to the shareholders' meeting the appointment of Carlos Crespo as the new CEO. Crespo, with a long career in the Spanish group and experience in auditing, was already de facto number two of Pablo Isla since last year, when he was appointed general director of operations of the group.