Inditex: Top line growth is a touch lower but of a better quality
Inditex: (BUY, Fair Value EUR33 (+14%))Top line growth is a touch lower but of a better quality
Q1 sales came in at EUR5.65bn or a touch shy of CS forecasts (EUR5.82bn) because of a more harmful FX headwind whilst the FX-n growth was a bit weaker-than-expected (+7% vs. CS of +8-9%e) in a challenging fashion market. However, margins topped expectations as the GM expanded 70bp to 58.9% (CS: 57.8%e), marking a clear sequential improvement vs. Q4 (-130bp), and the EBIT margin was up 10bp to 15.1% (CS: 14.1%e). Reassuringly, current trading showed a sales growth acceleration with 9% FX-n from 1st May to 11th June. Conference call today at 9.00am CET.
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