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Inditex earns 6% more in 2019: it provides 287 million for the Covid-19 and delays the dividend

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Inditex has announced this Wednesday that, given the situation that arose in the financial year 2020 as a result of the expansion of the coronavirus, it has decided Provision 287 million euros, which modifies the income statement for the financial year 2019. This provision is reflected in the gross margin, which in this way grows 7% to 15,806 million euros, 55.9% of sales, 79 basis points less than in 2018. In the absence of this provision, the gross margin would have grown 9%, to 16,093 million euros, which represents 56.9% of sales, 22 basis points above 2018. Likewise, net profit, which grew by 6% and reached the figure of 3,639 million euros, without the provision it would have grown 12%, to 3,855 million euros.

Furthermore, the company has indicated that, taking into account the current situation of uncertainty caused by the coronavirus pandemic, the Board of Directors considers that At the present time, the necessary conditions do not exist to make the appropriate decision on the distribution of the dividend, in the framework of the proposal for the application of the 2019 fiscal year result. Consequently, has decided to allocate all of this result to reserves and refer to a subsequent previous Board of Directors to the General Shareholders' Meeting that will take place next July, the final proposal on said distribution.

Taking advantage of the publication of these accounts for the 2019 financial year (from February 1, 2019 to January 31, 2020), the president of Inditex, Pablo Isla, wanted to send a message of "Serenity, trust and solidarity". "It seems essential to me today to appeal to serenity, trust and solidarity. Because we will overcome these difficult moments, which will remain as a bad memory in our history. From the common answerAs we are demonstrating in different countries and cities, we will all be able to overcome this situation together. From its solidity, from its principles, our company will always be ready to give an answer in everything that is necessary."

The results show an increase sales of 8%, up to 28,286 million euros, and sales in comparable stores increased by 6.5%. Sales in Spain have grown 4.6%. Spain currently represents 15.7% of total sales, while Europe without Spain accounts for 46%, Asia and Rest of the World, 22.5%, and America, 15.8%.

The company's sales through its global online platform grew by 23%, reaching 3,900 million euros, 14% of total sales.

The net financial position It reaches 8,060 million euros, with a growth of 20%, due to the "strong" operating performance in 2019, the company has said.

Inditex's overall tax contribution reached 6,749 million euros. In Spain it amounted to 1,874 million euros.

A 2020 BEGINNING OF VIRUSES

In a global extension environment of the Covid-19, Inditex has explained that it has gone incorporating and applying the necessary procedures to prevent contagion from the beginning of the outbreak, including store closings in areas where necessary, and will continue in permanent collaboration with health authorities.

He also noted that the initial spring-summer collections were very well received by customers in February, but the global expansion of the Covid-19 has subsequently had an impact on certain markets, and, as of yesterday, March 17, the group temporarily closed 3,785 stores in 39 markets, while in China all stores are open except for eleven, following the criteria of the health authorities.

Online sales develop with "normality" in all markets. The supply chain also operates normally.

In this environment, In-store and online sales at constant exchange rates between February 1 and March 16, 2020 decreased by 4.9%. Store and online sales at constant exchange rates decreased by 24.1% between March 1 and 16.

Sales in February usually represent around 6% of the group's annual sales. Sales in March usually represent 7% of annual sales.

"Although it is early to quantify the future impact of the outbreak on our operations in 2020, Inditex closely monitors the development of the situation, with full confidence in our business model and its solvency," the company has said. "The current situation, generated by external and temporary factors does not change the long-term vision of the fundamentals of the business model and its growth potential," he added.

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