Inditex profits rise to €6.2 billion, Q4 performance exceeds expectations, strong spring sales growth

Investing.com - Inditex announced a 6% increase in full-year net profit to €6.2 billion on Wednesday, with Q4 profits exceeding expectations. The company also stated that spring trading, calculated in constant currency, accelerated by 9%, driving the Zara parent company’s stock price up nearly 2%.

The Spanish group reported a net sales of €39.9 billion for the fiscal year ending January 2026, representing a 3.2% increase based on reported figures and a 7% increase in constant currency terms. Foreign exchange headwinds compressed the reported figures by nearly 4 percentage points.

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Full-year gross margin reached 58.3%, up 42 basis points. Jefferies analysts noted that Q4 profit margins expanded by 84 basis points, compared to a market consensus of 33 basis points.

The broker rated the stock as “Buy” with a target price of €67, calling it “a strong quarter,” and stating that the results confirm “market share growth is re-accelerating, and cost deflation is driving gross margin expansion.”

Pre-tax profit increased by 5.8% to €8 billion, with a pre-tax profit margin of 20.1%. EBITDA grew 5% to €11.3 billion.

CEO Oscar García Maceiras said the performance “reflects our team’s ability to win the trust of millions of customers every day across our eight brands.”

Smaller brands under Inditex outperformed Zara. Bershka net sales rose from €2.93 billion to €3.286 billion, and Stradivarius increased from €2.66 billion to €3 billion.

Zara, Zara Home, and Lefties combined grew from €27.78 billion to €28.05 billion. Pull&Bear was the only brand to see a profit decline, with pre-tax earnings dropping from €458 million to €422 million.

Despite record profits, cash generation weakened. Free cash flow decreased from €4.81 billion to €4.69 billion, impacted by an €803 million deterioration in working capital, compared to €198 million in the same period last year. Net financial cash declined from €11.5 billion to €10.96 billion.

Capital expenditures increased from €2.67 billion to €2.71 billion, including the final year of an €1.8 billion two-year logistics investment plan. The company expects normal capital expenditure for FY2026 to be around €2.3 billion.

For FY2026, Inditex expects total store area to grow by approximately 5%, with a negative 1% impact on sales from currency exchange rates at current rates. It forecasts gross margin to remain stable, with a fluctuation of ±50 basis points. Among 214 markets, the 5,460 stores saw online sales grow by 4.8% to €10.7 billion.

The board will propose a total dividend of €1.75 per share, including €1.20 in ordinary dividends and €0.55 in special dividends, paid in two equal installments in May and November 2026, each €0.875. As of January 31, 2026, inventory decreased by 2% compared to the same period last year.

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