Press releases
Inditex continues its international expansion with a 942 million euro investment
• The Group’s net profit rose by 25% to 1,250 million euros
• Consolidated sales increased to 9,435 million euros, i.e. 15% more than the previous year, 17% in local currencies and constant perimeter. Like-for-like sales grew by 5%
• With 560 new stores during the financial year –80% of them outside Spain-, Inditex achieved a total of 3,691 stores in 68 countries, four more than the year before (Croatia, Colombia, Guatemala and Oman)
• International sales represented 62.5%, compared to 60.4% in 2006
• The gross sales margin reached 56.7%, 48 basic points higher than in the financial year 2006, and the EBIT grew by 22%
• The group created 10,277 jobs in 2007, resulting in a total workforce of 79,517 at the end of the year
• The Board of Directors will submit a proposal to the General Meeting of Shareholders to distribute 652 million euros as dividend for the year -1.05 euros per share-, which represents 25% more than the previous year
• During the beginning of 1H2008 sales performance is according to Management expectations. Store sales in local currencies have increased by 17% from 1 Feb. to 23 Mar. 2008
Inditex increased its net profit in FY 2007 (from 1st February 2007 to 31st January 2008) by 25%, reaching 1,250 million euros. Sales reached 9,435 million euros, 15% increase compared to the previous year, 17% in local currencies and constant perimeter. The increase in sales was due to both the very good performance of the like-for-like sales, growing by 5% in the FY, and the new selling area, with 560 new stores opened.
| Economic indicators | 2007 | 2006 | 07/06 |
| Sales | 9,435 | 8,196 | 15% |
| Growth in like-for-like sales | 5% | 5.5% | |
| International sales | 62.5% | 60.4% | |
| Gross margin of sales | 5,349 56.7% | 4,607 56.2% | 16% |
| EBITDA of sales | 2,140 22.8% | 1,790 21.8% | 20% |
| EBIT of sales | 1,652 17.5% | 1,356 16.5% | 22% |
| Net profit of sales | 1,250 13.3% | 1,002 12.2% | 25% |
| Other indicators | 2007 | 2006 | 07/06 |
| CAPEX | 942 | 887 | 6% |
| No. of stores net openings | 3,691 560 | 3,131 448 | |
| No. of countries new markets | 68 4 | 64 2 | |
| Employees | 79,517 | 69,240 | 10,277 |
In FY 2007 Inditex continued its expansion strategy, aimed at consolidating sales in the leading European markets and at growth in areas with high potential, such as Eastern Europe and Russia, and the Asia-Pacific region. The Group opened 560 stores during 2007, reaching a total of 3,691 stores in 68 countries by 31st January. 80% of the new stores were opened outside Spain and the contribution to sales from international stores has risen to 62.5%, compared to 60.4% the year before.
| Sales by geographical area | 2007 | 2006 |
| Europe (ex Spain) | 42.4% | 40.6% |
| Spain | 37.5% | 39.6% |
| The Americas | 10.8% | 11.0% |
| Asia and Rest of the World | 9.4% | 8.9% |
Investments The overall investments totalled 942 million euros, 6% more than the 887 million euros of ordinary investment in 2006. Most of these investments were dedicated to the opening of new stores. Additionally, CAPEX was dedicated to the start up of the Meco (Madrid, Spain) logistic platform operations and the capacity increase of the other logistic platforms.
Job creation A growth in activity has also translated into an increased workforce for the Group with 10,277 new employees, reaching a total of 79,517.
Operating efficiency During 2007 optimization of the operating efficiencies has continued to be a key part of the Group’s strategy. There has been an improvement in the gross margin of 48 basic points, reaching 56.7% of sales. EBIT totalled 1,652 million euros and EBITDA 2,149 million, with a growth of 22% and 20% respectively.
Dividend Inditex’ Board of Directors has agreed to propose to the General Meeting of Shareholders a 25% increase in the dividend relating to the profit for FY 2007, which will involve a dividend of 652 million euros, 1.05 euros per share.
Social and environmental commitment during the year In July 2007 Inditex presented its shareholders with the Environmental Strategic Plan for 2007-2010 that supports actions in this area, which Inditex considers to be one of its strategic variables. This Plan implements various projects related to improving energy efficiency in all areas of the business, a gradual increase in the use of renewable energy and the reduction of greenhouse gas emissions. All of this is fits in with Inditex’ Environmental Management System. During 2007, different actions were carried out, such as:
• Start of installation process of renewable energy generation units in the Meco (Madrid), Zaragoza and León logistics centres;
• Use of diesel replaced by natural gas in the Sallent de Llobregat (Barcelona) and Arteixo (A Coruña) centres;
• Installation of a cogeneration plant in Tordera (Barcelona);
• Introduction of recycled biodiesel fuel in the Group’s vehicles, and inclusion of electrical vehicles in the distribution centres.
Also during 2007 different measures under the Eco-Store project were introduced, such as more efficient lighting and climate control systems, comprehensive waste management processes and training programs for in-store staff.
As part of its corporate responsibility policy, with a particular focus on strengthening the production chain, Inditex signed in October an internationally-unprecedented agreement with the International Textile Garment and Leather Workers Federation (ITGLWF) by virtue of which the international trade union and Inditex undertook to make a joint effort to ensure fulfilment of the Code of Conduct for External Suppliers and Manufacturers.
Another important initiative taken during the year is the collaboration agreement signed between Inditex and Médecins Sans Frontières (MSF), under which both organisations will foster the development of health-related projects in deprived or conflictive areas. The first initiative that will be undertaken consists of funding an MSF Spain health care project in Somalia (Africa), for which Inditex has agreed to invest 1.5 million euros.
Massimo Dutti also opened the second store as part of its ‘For & From’ Project, this time in the Allariz shopping centre (Ourense), at which disabled persons are employed. In conjunction with the Confederación Galega de Persoas con Discapacidade (COGAMI) and the Council of Allariz, the store has been designed with complete solutions in terms of disabled access and mobility for visitors.
Outlook for 2008 During the beginning of 1H2008 sales performance is according to Management expectations. Store sales in local currencies have increased by 17% from 1 Feb. to 23 Mar. 2008.
The increase in selling area expected for 2008 is 290,000 m2. The expansion priority areas will be the European markets and the Asia-Pacific region, in which the Group will mantain the strong rate of growth. Around 85% of the new selling area will be international stores. The investment forecast for this year is around one billion euros.
Over 2008 the Group is also planning to start operations in four new markets: Korea, Ukraine, Egypt and Montenegro. Therefore, by the end of 2008 the Group will trade in 72 countries.
The range of new stores for 2008 is between 560 and 640. These include the launch of a new retail concept specialising in accessories, footwear and other fashion items named Uterqüe. This new concept is expected to open between 20 and 30 stores in 2008.
| Openings forecast for 2008 | Range | international % |
| Zara | 145-155 | 85% |
| Pull and Bear | 65-75 | 80% |
| Massimo Dutti | 45-55 | 75% |
| Bershka | 85-95 | 85% |
| Stradivarius | 75-85 | 70% |
| Oysho | 85-95 | 65% |
| Zara Home | 40-50 | 80% |
| Uterqüe | 20-30 | 20% |
| TOTAL | 560-640 |