Analysts are racing to keep track of Inditex. The ‘Bloomberg’ consensus had fallen short with the valuation of the textile giant and the investment bank has launched in recent days to revise its target price above the barrier of 30 euros. Bestinver, CaixaBank BPI, RBC Capital Markets or Santander have been the last firms to do so after the company founded by Amancio Ortega has closed the session this Thursday at 29 euros.
The ‘acceleration’ of the Ibex since the beginning of 2023, at 19-month highs, has served to catapult the value, which has exhausted its potential on the stock market this Thursday. The market expected a price of up to 28.83 euros, a figure that has been exceeded after rising 0.6% yesterday, accumulating a revaluation of more than 16% since January 2. Thus, after the optimism among investors has boosted the stock markets, eating up the twelve-month run of this value, the analysis houses have once again evaluated the price of their titles upwards. The purchase recommendations remain at 70% and only 8% advise to part with their shares.
The upturn in recent weeks helps it get closer to the capitalization it registered just before the remodeling of the Inditex leadership, which resulted in the appointment of Marta Ortega, daughter of the founder, as non-executive president and with the departure of Pablo Isla after 17 years of professional career in the group. At the close of the Spanish stock market this Thursday, its market value amounted to 90,000 million, a figure that is on the heels of that registered one day before making this relief public.
The war in Ukraine has dealt a heavy blow to Inditex. The international pressure exerted against Russia after unleashing a war in Ukraine has forced it to divest itself of all its business in that country and sell its stores to the real estate group Daher, with whom it does not rule out collaborating in the future. The decision comes after closing the 502 establishments it had in the Eurasian region at the beginning of March 2022.
Until that moment, Russia was the second place for operating profit for Inditex, according to the 2021 balance, so the resignation to this market has meant a blow to its accounts, being forced to provision 216 million. The uncertainty surrounding the war, the sanctions against the Kremlin en bloc by the Union during Europe and the flowering of recession fears severely punished Inditex on the stock market in the first quarter of 2022, which multiplied losses almost tenfold of the Ibex 35 (30.6% vs. 3.64%).
Under these circumstances, Marta Ortega made her debut in office on April 1, an entry into the field of play that has also been good for the shares of the company that owns brands such as Zara, Massimo Dutti or Bershka. These rebounded more than 9% after Inditex managed to recover the pre-Covid sales level, with a turnover of 6,742 million, above analyst forecasts.
In the absence of knowing the overall result for 2022, Inditex has managed to maintain this trend in subsequent months. The accounts for its third fiscal quarter show its ability to move in an inflationary environment with an increase in both margins and profitability, which was already weighed down by the shadow of the slowdown in consumption, as warned by the group itself.
In a context in which the Chinese Shein is consolidating as the main competitor of fashion ‘designed in Spain’, one of the most urgent challenges facing Ortega, in addition to the workers’ strike, for which he has already proposed to the unions the equalization of salary conditions throughout the country, will be to consolidate the digital transformation and logistics of Inditex. Under the threat of an economic slowdown, the company has opted to gain a foothold in the second-hand clothing market and has introduced measures such as charging for Zara’s online returns in Spain.
