Inditex's earnings results are worse than expected

March 10, 2021 16:00

During today's trading day, and before the market opened, the Spanish textile giant based in Arteixo with thousands of stores throughout the world has announced its earnings results for the 2020 financial year.

These results were not positive, showing a 70% decrease in profit, which have been weighed down by the pandemic and restrictions imposed. Profits amounted to 1.1 billion euros, although the most worrying fact is the decrease in net profit during the fourth quarter, with a decrease of 53% compared to the previous year, despite the Christmas season.

These results are below analysts' forecasts of a 62.9% drop. Despite this, the company has announced an increase in its dividend to 70 cents per share.

On the positive side, in order to face the pandemic and restrictions, as of brands such as Zara, Pull & Bear, and Stradivarius, Inditex increased their online presence over the past year, expanding the company's nine brands to an online presence in 216 markets. This expansion led to strong growth in online sales, accounting for 27% of the sales volume of the entire business.

Technically speaking, Inditex is trading in an area close to 29 euros per share in an upward momentum that began at the end of last January at 24.36 euros per share, which helped it overcome its resistance level of 28.30 euros per share, and mark annual highs and levels not seen since February 2020. Despite this, still below the levels at which it traded before the start of the Covid-19 pandemic.

After these results, it is to be expected that the price will make some correction, although due to positive future prospects from the vaccination process and eventual economic improvement, it is possible that this will come to pass or will not be very strong. Therefore, it is very important to watch its behaviour during the coming trading days, and see if it is able to maintain its support levels to continue its current uptrend.

Source: Inditex daily chart, Admiral Markets MetaTrader 5 platform from November 15, 2019, to March 10, 2021. Taken on March 10 at 1:00 p.m. CET. Note: Past performance is not a reliable indicator of future results, or future performance.

 Price evolution of the last 5 years:

  • 2020: -17.20%
  • 2019: 40.71%
  • 2018: -23.05%
  • 2017: -10.44%
  • 2016: 2.33%

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