Maintaining an operating margin of 17% was a fundamental pillar of Inditex during the mandate of Pablo Isla, which ended in April 2022 with the replacement of Marta Ortega, current non-executive president of the textile company, and Óscar García-Maceiras, who took over as director. position of CEO a little earlier, in November 2021. After 17 years at the helm of the company, Isla handed over the baton of a company well prepared for the future, with a defined strategy and a clear expectation: to achieve a margin operational (which does not take into account interest or taxes) of 18%. In recent years this figure has not only been reached and exceeded, but the consensus of experts who monitor the behavior of the Galician already expects a an operating margin of 20.3% by 2026, what does it mean to assimilate to heavy goods vehicles Europeans love LVMH.
Over the past decade, Inditex has maintained an Ebit margin of 17%, or close to it, in most years (see chart), despite the fact that this figure declined slightly through 2018, from 17.7%. 2014 to 16.7% of 2018. The obvious exception was the coronavirus period, with operating margin that fell to 7.8% in 2020, but increased twice as much the following year, to 15.5 %. Now, the board of directors that brings together FactSet hopes that this the operating margin reaches 19.6% in 2024.
To further broaden the comparison, within the segment retail In Europe, the Spanish company is by far the one that achieves the highest Ebit margin of the others, and only the British company Next comes close, with 18.1% by 2024. Indeed, among the 11 The most representative retail companies in the Old Continent, six have operating margins below 10%, according to FactSet data.
From Bloomberg Intelligence They explain that Inditex’s supply chain sets the tone for the industry and supports margin. “Inditex is the second largest specialty apparel retail chain in the world, with operations in more than 200 territories. Its supply chain experience is the foundation on which its commercial productivity and high Ebit margin are based. Zara, The best-known chain, represents approximately 72% of turnover and was a pioneer in the proximity supply chain which, combined with the response of store managers, allows rapid replenishment of the best-selling items and achieves a high percentage of sales at full price.
The estimate of this ratio has also increased throughout this year, since At the beginning of January, an Ebit margin of 19.2% was estimated for 2026 and the forecast has already reached this historic level of 20%. The growth of this figure is in line with other records established by the company chaired by Marta Ortega. Among them, recording a historic profit in 2023, reaching 5.381 million euros. For the current year, the consensus of experts predicts a new record, at 5.978 million, which will be definitively exceeded in 2025, the year for which analysts expect profits of 6.551 million.
Although the textile company shows its strength with each presentation of results, during the last meeting (the presentation of its second fiscal quarter, in September), it announced the extension for sale at streaming in the main European markets so as not to be left out of the trend live shopping which other companies in the sector, such as Shein, are already using with great success, as Renta 4 points out. The textile company opened this new sales channel, more focused on young people, on September 25. Regarding the results of the first half, market analyst Javier Cabrera highlighted: “Cash generation suffered, due to the increase in investments following the project to increase operational capacity. This seems to us to be a necessary sacrifice so that the margin continues to grow over the coming years.. In addition, working capital management continues to be very good, showing a reduction in stocks and demonstrating the good reception of its garments”, concludes the expert.
Barclays predicts that the second half will be “stronger and more solid”, since it was only during the first six weeks of the third quarter that sales increased by 11%, “despite a difficult macroeconomic context”, warns- She. “The gross margin improvement of 20 basis points in the first half also suggests that Inditex will likely achieve the highest figure of the year (give or take 50 basis points). Although results in China have slowed in recent months, this has been more than offset by strong activity in Europe, including Spain, and greater store productivity,” the company added.
Thus, one of the requests from the experts who follow the company is to break down its Ebit margin into two divisions: sales online and physics. Something that hasn’t happened yet.
Historic highs on the stock market
Its price reached levels never seen in its 23 years of stock market history also in this period. course. Its shares exceeded the 50 euro barrier for the first time, with a stock market revaluation of almost 34% over the year, making it the third most bullish value on the Ibex 35 (behind Sabadell and Caixa). This was already in the news when some analysis firms valued Inditex at 50 euros, already exceeded, with a stock moving around 52.7 euros, which exceeds the current average price target established by the consensus of Bloomberg, at 50.49 euros.
Although the average valuation continues below, there are already entities that see Inditex above 55 euros, such as Morgan Stanley, Goldman Sachs, Sadif Investment, Grupo Santander, Banco Sabadell, HSBC, Oddo and DZ Bank, which is the one which gives it the highest price target, at 60 euros.
Another of the milestones that add to the trophy case of Arteixo must reach 150 billion market capitalization (which continued grow bigger, and this already amounts to 164 billion). With this figure, Inditex has already become the first Spanish listed company to reach this stock market value, with which it surpasses TotalEnergies and is the sixth largest company in the EuroStoxx 50, the benchmark for the euro zone.
