Inditex
Note: This is a daily stock update and the information stands true as of 09/09/26, 09:00 CET
Company Update:
Inditex reported another stronger than expected first half, with Q2 26 sales up 9.1% YoY, accelerating from Q1 26, and growth continuing to be driven by European markets.Gross profit reached €6.2bn, with gross margin improving by a further 22bps YoY to 56.7%.
However, operating expenses rose faster than sales, resulting in EBIT of €2.1bn and an operating margin of 19.0%, slightly below consensus. We believe the higher cost base likely reflects rising polyester and cotton prices, as well as more volatile transportation conditions during the quarter.
The company maintained its FY26 margin guidance unchanged and continues to expect a broadly stable gross margin within a range of +/-50bps.
Very encouragingly, Inditex said its Autumn/Winter collections have been very well received. Sales in constant currency increased 9% between 1 August and 7 September 2026, well ahead of current Q3 consensus expectations of around 5%.
Expert Opinion:
Inditex remains a terrific war machine, capturing a seemingly ever-larger share of its clients' purchasing power, even in a more difficult consumption environment, which makes it a rather defensive play in the discretionary consumer durables segment. But the miss on operating margin is a surprise . Is it a one off or is there something more sinister? We will probably know more after the conference call.
We believe the good fundamentals of Inditex are priced in and with the company trading on PE27 (Jan) and 28 ot 25.8x and 23.7x, we see little fundamental upside. No reason to be long the stock at this stage.
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