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Inditex gross profit margin up in Q1 to year ago

Inditex gross profit margin in the first quarter was 58.9 per cent compared to 58.2 per cent a year earlier. However, same store sales growth slowed slightly in the quarter. Sales in stores that have been open for at least one year rose around five per cent in the three months ending April 30 compared with a year earlier. That is a slight slowdown from the company’s previous fiscal quarter, when like-for-like sales rose around six per cent year-over-year.

Inditex closed its fiscal first quarter with 7,448 stores in 96 markets, a slight decline from the 7,475 stores the company had in the previous quarter. Spain-based Inditex, owns Zara and seven other brands including Massimo Dutti and Bershka.

Competitors have been unable to fully replicate Inditex's business model, which takes clothes from design to rack in weeks. The company’s gross profit margin is expected to bottom out this year as currency headwinds ease. The crucial profitability metric has fallen somewhat in recent years.

Zara's growth is flagging because of heightened competition, which is forcing the company to lower the price of clothes and footwear and to put more apparel on sale. Growth in online sales is also chipping away at profitability, because it is more expensive to ship internet orders.