Inditex cracks

21 March 2003

The Spanish retailer tripped over in the fourth quarter. Ebitda was practically flat. Inditex has had a charmed run so far and been valued accordingly. Can this last?

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Inditex reported sales in 2002 grew 22% to E4bn. The Spanish retailer said that excluding currency impacts, sales would have grown by 28%. Inditex also said that its likeforlike sales were up 11% for the year. Operating profit increased by 27% to E660m and earnings per share were up 29% to E0.70.

The fourth quarter was hit by slower sales in the two weeks preceding Christmas and by the general strike in Venezuela, the group said. Q4 sales were 15% higher year on year – a slowdown from the 28% growth achieved in Q3. On a constant currency basis, Inditex said sales would have been 22% higher.

The group's gross margin fell by 200 bp, and its operating margin fell by 300bp. Its ebitda was only 0.8% higher than in the fourth quarter of 2001. However, Inditex's fourth quarter earnings rose by 25%

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