INTERIM THREE MONTHS 2014 RESULTS
1 February 2014 to 30 April 2014
•
Inditex continues its global, multi-concept, multi-channel growth.
•
Strong operating performance: In 1Q2014 store and online sales in local
currencies increased by 11%.
•
Net sales reached €3.7 billion, 4% higher than in 1Q2013. Currency translation
reduced reported sales by 6 percentage points owing to the strong Euro
versus a number of currencies. The consolidation of Tempe S.A. according to
the equity method reduced reported sales by 1%.
•
Space growth for FY2014 is on track. In 1Q2014 new stores were opened in 26
markets.
•
Gross profit reached €2.2 billion, 3% higher. Gross margin reached 58.9%.
•
Tight control of operating expenses.
•
EBITDA reached €732 million, versus €749 million in 1Q2013.
•
Net Income reached €406 million (€0.65 per share), versus €438 million (€0.70
per share) in 1Q2013.
•
Store and online sales in local currencies have increased by 11% from 1
February to 8 June 2014.
•
Global online sales launches are on track. Zara plans to launch online sales
in South Korea and Mexico in September 2014, taking the total for Inditex to
27 markets. Zara also plans to open in Tmall in China over the Autumn/Winter
season.
•
Inditex’s Board of Directors has proposed a 5-for-1 stock split to the General
Shareholders Meeting to be held on 15 July 2014.
Performance in 1Q2014
Inditex continues its global, multi-concept, multi-channel growth. In 1Q2014 Inditex achieved a
strong operating performance. Store and online sales in local currencies increased by 11%.
Tempe S.A is a supplier of shoes and accessories for Inditex in which Inditex has a 50%
interest. According to a new IASB rule joint agreements (companies controlled by more than 1
shareholder) must be consolidated from 2014 under the equity method and not under
proportional consolidation principles as of today. Inditex has consolidated its 50% interest in
Tempe S.A. in 2014 according to this rule. This is a presentational issue with no impact on Net
income.
Net sales reached €3.7 billion, 4% higher than in 1Q2013. Currency translation reduced
reported sales by 6 percentage points owing to the strong Euro versus a number of currencies.
The consolidation of Tempe S.A. according to the equity method reduced reported sales by 1%.
Space growth and online launches for FY2014 are on track. In 1Q2014 Inditex opened stores in
26 markets. At the end of 1Q2014 INDITEX operated 6,393 stores in 88 markets. A list of
openings and total stores by concept is included in Annex I.
The Gross profit rose to €2.2 billion, 3% higher than the previous year. The Gross margin
reached 58.9% of sales compared with 59.6% in 1Q2013.
Operating expenses have been tightly managed over the quarter, growing by 6%, mainly as a
result of the new retail space added and include all the start-up costs for new openings.
EBITDA came to €732 million versus €749 million a year earlier and EBIT to €530 million
versus €559 million a year earlier.
The following chart shows the breakdown of Financial results:
Million Euros
Net financial income (losses)
Foreign exchange gains (losses)
Results from companies consolidated by equity method
Total
1Q2014
1Q2013
3
(4)
3
2
3
8
12
The tax rate for 1Q2014 is the best estimate for FY2014 according to current information.
Net income came to €406 million, versus €438 million a year earlier.
2
INDITEX maintained its solid financial position at the end of the quarter. INDITEX paid €754
million (€1.21 per share) as FY2013 interim dividend on 2 May 2014.
Million Euros
Cash & cash equivalents
Short term investments
Current financial debt
Non current financial debt
Net financial cash (debt)
30 April
2014
3,358
220
(8)
(6)
3,564
30 April
2013
3,422
246
(3)
(3)
3,662
The operating working capital position remains negative as a consequence of the business
model:
Million Euros
Inventories
Receivables
Payables
Operating working capital
30 April
2014
1,807
906
(3,907)
(1,194)
30 April
2013
1,627
899
(3,639)
(1,113)
3
Start of 2Q2014
Store and online sales in local currencies have increased by 11% from 1 February to 8 June
2014.
Global online sales
Zara plans to launch online sales in South Korea and Mexico in September 2014, taking the
total for Inditex to 27 markets. Zara also plans to open in Tmall in China over the Autumn/Winter
season.
Agreements of the Board of Directors
The Annual General Shareholders Meeting will be held at the Company’s registered office on 15
July 2014.
Inditex’s Board of Directors has proposed to the General Shareholders Meeting a FY2013 total
dividend of €2.42 per share, €1.5 billion according to the current number of shares. €1.21 per
share was paid on 2 May 2014 as interim dividend and €1.21 per share would be payable on 3
November 2014 as final ordinary and bonus dividend.
Inditex’s Board of Directors has proposed a 5-for-1 stock split to the General Shareholders
Meeting. This would suppose no change to the share capital. Subject to approval, each Inditex
shareholder on record at the close of business on 25 July, 2014 will receive 5 new shares for
every existing share held on the record date. Trading of the new shares would begin on 28 July,
2014.
Subject to the approval of the proposed stock split to the General Shareholders Meeting, the
final ordinary and bonus dividend payable on 3 November 2014 would be €0.242 per share.
On 10 June 2014 Mr. Juan Manuel Urgoiti López de Ocaña announced his departure from the
Board of Directors. Inditex would like to thank Mr. Urgoiti for his significant contribution during
his tenure.
The Board of Directors has proposed the appointment of Mr. Rodrigo Echenique Gordillo as
board member of Inditex. The proposal must be approved at the Annual General Meeting.
For additional information:
Investor Relations
ir@inditex.com
Tel: +34 981 18 53 64
Fax: +34 981 18 53 65
www.inditex.com
4
Disclaimer
This document is of a purely informative nature and does not constitute an offer to sell,
exchange or buy, or the solicitation of an offer to buy, securities issued by any of the companies
mentioned herein.
This document contains forward-looking statements. All statements other than statements of
historical fact included herein, including, without limitation, those regarding our financial position,
business strategy, management plans and objectives for future operations are forward-looking
statements. Any such forward-looking statements are subject to risk and uncertainty and thus
could differ materially from actual results.
Some of these risks include, amongst others, ongoing competitive pressure in the sector,
consumer tastes and spending trends, economic, political, regulatory and trade conditions in the
markets where the INDITEX Group is present or in the countries where the Group’s products
are manufactured or distributed.
The risks and uncertainties that could affect the forward-looking statements are difficult to
predict. Except for the cases where the prevailing rules and regulations in force require
otherwise, the company assumes no obligation to publicly revise or update its forward-looking
statements in the case of unexpected changes, events or circumstances that could affect them.
Given the uncertainties of forward-looking statements, we caution readers not to place undue
reliance on these statements.
For a discussion of these and other factors that may affect forward looking statements and the
INDITEX Group’s business, financial conditions and results of operations, see the documents
and information communicated by the company to the Comisión Nacional del Mercado de
Valores (the Spanish Securities Commission).
The contents of this disclaimer should be taken into account by all persons or entities.
- TABLES AND APPENDIX TO FOLLOW -
5
Consolidated financial statements
Grupo Inditex
1Q2014 profit & loss statement
Million Euros
1Q2013 (*)
1Q2014 (*)
Net sales
Cost of sales
Gross profit
3,748
(1,540)
2,208
3,593
(1,453)
2,140
Gross margin
58.9%
59.6%
Operating expenses
Other net operating income (losses)
Operating cash flow (EBITDA)
(1,474)
(1)
732
(1,389)
(2)
749
EBITDA margin
19.5%
20.9%
Operating income (EBIT)
(203)
530
(190)
559
EBIT margin
14.1%
15.6%
Financial results
Results from companies consolidated by equity method
Income before taxes
(1)
3
532
12
571
EBT margin
14.2%
15.9%
Net income
(124)
408
(131)
440
Amortisation and depreciation
Taxes
10.9%
12.2%
Minorities
2
2
Net income attributable to the controlling company
406
438
Net income margin
10.8%
12.2%
Earnings per share, cents of euro (**)
65
70
(*) Unaudited data
(**) Shares for EPS calculation 622.9 million for 2014 and 623.3 million for 2013
6
Grupo Inditex
Consolidated Balance Sheet as of 30 April 2014
Million Euros
30 April
2014 (*)
30 April
2013 (*)
ASSETS
CURRENT ASSETS
Cash & cash equivalents
Short term investments
Receivables
Inventories
Other
6,541
3,358
220
906
1,807
250
6,342
3,422
246
899
1,627
147
NON CURRENT ASSETS
Tangible assets
Intangible assets
Financial investments
Other
7,325
5,302
840
177
1,006
6,526
4,950
820
4
753
13,866
12,868
CURRENT LIABILITIES
Payables
Financial debt
Other
3,960
3,907
8
45
3,677
3,639
3
35
NON CURRENT LIABILITIES
Financial debt
Deferred taxes
Other
1,003
6
194
803
890
3
164
723
SHAREHOLDERS' EQUITY
Equity attributable to the Group
Minority interests
8,903
8,869
34
8,301
8,263
38
13,866
12,868
TOTAL ASSETS
TOTAL LIABILITIES &
SHAREHOLDERS' EQUITY
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY
(*) Unaudited data
7
Annex I
Openings and total stores by format:
Gross
Net
openings openings
26
0
14
15
18
13
9
10
1
19
(2)
11
8
11
8
0
8
(10)
30 April
2014
1,846
162
864
673
965
866
549
402
66
106
53
6,393
Concept
1Q14
Zara
Zara Kids
Pull and Bear
Massimo Dutti
Bershka
Stradivarius
Oysho
Zara Home
Uterqüe
Total
Total stores
30 April
2013
1,763
171
817
630
899
794
529
364
91
6,058
8