LONDON — Inditex saw net income soar in the first fiscal quarter ended April 30 despite pausing business in Russia and Ukraine due to the conflict in the region.
The fast-fashion giant, parent of brands including Zara, Massimo Dutti and Bershka, posted an 80 percent profit uptick year-over-year to 760 million euros, with robust performance across all regions, and in the U.S. in particular.
The company said it made a provision of 216 million euros to cover all of the extraordinary costs from the temporary closure of its business in Ukraine and Russia. Stores in the region have been closed since late February.
The group said it would have reported net profit of 940 million euros had it not been for the closures.
Revenue grew 36 percent to 6.74 billion euros, which Inditex said was underpinned by a “sharp recovery” in store traffic and a “good reception” for all seven brands’ latest collections.
China was the only market that underperformed: some 67 stores were closed in the period due to COVID-19-related restrictions. Inditex said the U.S. is now its second-biggest market after Spain, where it is headquartered.
Óscar García Maceiras, chief executive officer of Inditex, said the results were the fruit of a “well-differentiated model that is delivering strongly. The strength and adaptability of the business model and the excellent performance of our creative, sales and operating teams are driving that differentiation forward, underpinned by a strategic focus on innovation, digitalization and sustainability.”
Inditex said the second quarter started on a high note, with sales increasing by 17 percent in constant currency between May 1 and June 5.
The company added that it is making “constant progress” on the delivery of its sustainability targets, with the ultimate goal of using cutting-edge technology to move “the textile industry, as a whole, toward circularity.”
The company said it has signed a three-year agreement worth more than 100 million euros with Infinited Fiber Company, committing to purchase 30 percent of future production of Infinna, a fiber created entirely from textile waste.
The project is part of Inditex’s Sustainability Hub, an open innovation platform created to promote and to scale up innovation in materials, technologies, processes and sustainable solutions.
Shares in Inditex closed up 6.4 percent to 23.63 euros on Wednesday.