• Revenue Growth: Sales increased by 7.5%, reaching EUR38.6 billion.
• Net Income: Increased by 9% to EUR5.9 billion.
• EBITDA: Grew 8.9% to EUR10.7 billion.
• Gross Margin: Achieved 57.8%, with gross profit increasing 7.6% to EUR22.3 billion.
• Free Cash Flow: Significant generation, with net cash position at EUR11.5 billion.
• Operating Expenses: Grew 126 basis points below sales growth, demonstrating good operating leverage.
• Inventory: Increased by 12% compared to the previous year.
• Dividend Proposal: Increase of 9% to EUR1.68 per share.
• Store & Online Sales: Grew 4% in constant currency between February 1 and March 10, with a 7% increase in the last commercial week.
• Capital Expenditure: Estimated at EUR1.8 billion for 2025.
• Logistics Expansion Plan: EUR900 million per year for 2024 and 2025.
• PBT Margin: Increased 50 basis points to 19.6%.
• Return on Capital Employed: Increased 101 basis points to 40%.

• Warning! GuruFocus has detected 4 Warning Sign with STU:OHCB.

Release Date: March 12, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Industria De Diseno Textil SA (IDEXF) reported a strong sales growth of 7.5% for 2024, demonstrating consistent demand for its collections.
• Net income increased by 9% to EUR5.9 billion, showcasing solid financial performance.
• The company plans to propose a 9% dividend increase for 2024, reflecting confidence in its financial health.
• The fully integrated Store&Online model has been a key driver of recent strong performance, with Store&Online sales in constant currency increasing 7% in the last commercial week.
• The company has a strong commitment to sustainability, with 73% of textile fibers used in manufacturing being lower-impact fibers by the end of 2024, aiming for 100% by 2030.

Negative Points

• The Americas region experienced an underlying slowdown excluding FX impacts, indicating potential challenges in this market.
• The company expects a minus 1% top line FX impact in 2025, which could affect revenue growth.
• Operating expenses grew 126 basis points below sales growth, indicating a need for continued cost management.
• Inventory levels increased by 12% compared to the previous year, which may suggest potential overstocking issues.
• The company faces challenges related to changing tariff regimes, particularly in the US market, which could impact profitability.

Q & A Highlights

Q: Can you comment on the outlook for the Americas region, considering the recent slowdown excluding FX? A: Gorka Garcia-Tapia, Investor Relations, explained that while there has been an FX impact, the Americas region has shown positive growth at constant currency. The US remains a strategic market with ongoing projects, including store openings and enlargements, indicating continued growth expectations.

Q: What is the constant currency growth rate for Zara, and how much of the 5% gross space growth will benefit Zara? A: Gorka Garcia-Tapia noted that the company is confident in achieving a 5% gross space growth for 2025 and 2026. The store optimization program has driven productivity, with sales per square meter increasing by 28% from 2019 to 2024, benefiting all regions and concepts, including Zara.

Q: Can you provide insights into the recent trading performance and regional consumer behavior? A: Oscar Garcia Maceiras Gonzalez, CEO, stated that despite high comparables, growth accelerated to 7% in the last commercial week. The Spring/Summer collections have been well received, and the company remains confident in its execution and differentiation strategy.

Q: What are the medium-term growth aspirations, particularly with new logistics capacity? A: Gorka Garcia-Tapia confirmed a 5% gross space growth expectation for 2025 and 2026. The company has achieved around 2% net space growth with this rate, and the logistics expansion will support future growth.

Q: How has the rollout of soft tag technology impacted margins and operations? A: Oscar Garcia Maceiras Gonzalez highlighted that the soft tag technology has improved customer experience and operational efficiency. It is part of a broader initiative to integrate store and online operations, enhancing productivity and customer service.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.