|Bid||148.70 x 0|
|Ask||148.70 x 0|
|Day's range||148.55 - 157.10|
|52-week range||98.13 - 214.35|
|Beta (5Y monthly)||1.14|
|PE ratio (TTM)||49.31|
|Forward dividend & yield||N/A (N/A)|
|Ex-dividend date||11 Nov 2019|
|1y target est||133.09|
(Bloomberg) -- Inditex SA’s quick-reaction strategy allowed the operator of Zara stores to reduce inventory in the middle of Covid-19 lockdowns, buoying first-half earnings.The Spanish clothing retailer managed to reduce stock-in-trade by 19% at the end of July, taking advantage of flexible purchasing agreements that allow the company to rapidly adapt to changes in demand. That softened the blow to earnings, which exceeded analysts’ estimates even though they were less than half last year’s level. The stock rose as much as 6.7% Wednesday morning.The world’s largest clothing chain operator has shown steady improvement after suffering its only loss on record in the first quarter. Chairman Pablo Isla is motoring on with a plan to invest about $3 billion in e-commerce, renovations and new stores over the coming three years to better position Inditex when the pandemic ends.Inditex has seen a “turning point” during the second quarter, Isla said on a call with analysts. The company can run in the future with even lower inventory levels, he said.A 74% surge in online orders buoyed sales, and almost all shops have reopened.Isla is navigating his most difficult year since joining the company a decade and a half ago. He reduced operating expenses by 21% in the first half, and revenue is gradually returning to more normal levels. While sales plummeted 72% in April, the decline was 11% in the first weeks of the third quarter.The results come a day after Hennes & Mauritz AB reported higher-than-expected quarterly earnings. Inditex’s Swedish rival has however been struggling to get rid of unsold garments, and its $4.6 billion inventory position was at a record proportion of sales at the end of May.The owner of Zara relies on production in Spain and nearby countries for the bulk of its garments, giving it more flexibility in adjusting orders because of the proximity to suppliers. H&M relies much more on clothes made in Asia, which need to be ordered longer in advance because they take months to be shipped to their final destinations.Consumers have been shifting to buy more informal clothing as many employees work from home, and that was reflected in Inditex’s results. Massimo Dutti, which sells office wear, was the chain that had the biggest drop in first-half sales, reporting a 42% decline. Oysho, which sells lingerie and yoga wear, had the smallest drop, at 31%.Gross margin should improve in the second half and should be stable over the full year, Isla said.(Updates with chairman comment in fourth paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Two key European retailers saw dramatic gains on Tuesday following their change in strategy amid COVID-19.
(Bloomberg) -- Hennes & Mauritz AB reported a return to profit that surged far past analysts’ expectations, a bullish sign for purveyors of fast fashion.The Swedish clothing retailer estimated pretax earnings reached about 2 billion kronor ($230 million) in the three months through August, based on preliminary results. That’s eight times the average analyst estimate and almost double the highest forecast. The shares rose as much as 13% in Stockholm Tuesday morning.Low-price fashion retailers such as Primark have been gaining market share as consumers return to shops in search of casual wear for working from home. H&M attributed the earnings to well-received collections and a fewer markdowns than it expected. The report soothed concern about H&M’s perennial issue with a buildup of inventory.“The level of price reductions is still a bit higher than last year, but substantially lower than what we guided for when we entered the third quarter,” Nils Vinge, director of investor relations, said via phone.Sales fell 16% in local currencies, moderating from a 50% drop in the second quarter. H&M began the period with 900 of 5,000 stores temporarily closed, and by the end of August, all but 200 were open. That number is now down to 142, Vinge said.H&M will report full earnings on Oct. 1, when investors will get more details on whether it managed to sell more of its unsold inventory. Stock-in-trade was at a record level in relation to annual sales at the end of the second quarter, at 40 billion kronor.The company did not provide any numbers for online sales, which grew 32% in local currencies in the previous quarter. However, Nils Vinge said that H&M’s e-commerce is profitable and “still going strong.”Analysts will probably raise their expectations after the results, though the consensus for a significant recovery in sales over the coming six to nine months is too optimistic, Morgan Stanley analysts wrote.Shares of Inditex SA, which is scheduled to report results Wednesday, rose as much as 5.1%.(Adds comments from investor relations in fourth paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.