Core Insights - Inditex, the owner of Zara, reported a year-on-year increase in fourth-quarter sales that met analyst expectations, despite indicating a slowdown in demand at the beginning of the year [1][2] - The company achieved fourth-quarter revenues of 11.21 billion euros ($12.2 billion), which aligns with the forecast of 11.2 billion euros by LSEG analysts and is an increase from 10.34 billion euros in the same period last year [1][2] - Full-year sales for 2024 rose by 10.5% in currency-neutral terms, totaling 38.63 billion euros, slightly above the anticipated 38.57 billion euros, with net income for the year at 5.88 billion euros, consistent with forecasts [2] Financial Performance - Fourth-quarter net income was reported at 1.42 billion euros, matching analyst expectations [2] - In comparison, the previous year's net sales were 35.9 billion euros with a net income of 5.4 billion euros, which were record highs for the company [2] - The company noted a slight slowdown in first-quarter sales for the current year, with revenues up 4% in currency-neutral terms from February 1 to March 10, compared to an 11% growth during the same period last year [3] Competitive Landscape - The results highlight the growing disparity between Inditex and its competitor H&M, which has faced challenges due to increased competition from lower-cost retailers like Shein [4] - H&M reported fourth-quarter sales that fell short of expectations, although they rose 3% in local currencies to 62.19 billion Swedish krona ($6.15 billion) [4] - H&M attributed its sales challenges to the timing of Black Friday, although it noted improvements in sales during December and January [4]

Group 1 - The company Industria de Diseño Textil, S.A. (IDEXY, IDEXF) has achieved a total return of 173% over the past two years [1] - The business model of the company has remained largely unchanged since the initial analysis [1] - The focus of the analysis is on intrinsic value, prioritizing undervalued and growing companies, particularly those in early development stages [1]

Financial Data and Key Metrics Changes - In the first nine months of 2024, net sales increased by 7.1% to €27.4 billion, with sales in constant currency growing by 10.5% [4][9][61] - Profit before taxes rose by 9.9% to €5.8 billion, while net income increased by 8.5% to €4.4 billion [5][9][62] - EBITDA grew by 7.2% to €8 billion, and the gross profit increased by 7.2% to €16.3 billion, resulting in a gross margin of 59.4% [9][10][69] Business Line Data and Key Metrics Changes - Sales growth was strong across all concepts, with both store and online sales performing well [4][10][73] - The company opened stores in 45 different markets during the period, including new locations for Massimo Dutti and Stradivarius [13][74] Market Data and Key Metrics Changes - The company operates in 214 markets, providing significant global growth opportunities [6][64] - Store and online sales in constant currency between November 1 and December 9, 2024, grew by 9% [5][30] Company Strategy and Development Direction - The company focuses on four key pillars: unique fashion proposition, optimized customer experience, sustainability, and talent commitment [3][60] - The growth of annual gross space is expected to be around 5% from 2024 to 2026, with an estimated capital expenditure of approximately €1.8 billion for 2024 [28][88] - Recent initiatives include the opening of stand-alone Zara Man stores and the introduction of The Apartment concept to enhance customer experience [50][117] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the business's growth potential, citing a robust operating performance and strong cash flow generation [5][64] - The company anticipates a stable gross margin for the financial year 2024, with a currency impact on sales estimated at around minus 3% [10][37] Other Important Information - The company has invested in Epoch Biodesign to promote textile-to-textile circularity and is committed to training and developing new talent through the Creatives program [23][84] - The final dividend payment for 2023 was €0.77 per share, made on November 4 [29][89] Q&A Session Summary Question: Impact of flooding in Spain on sales or logistics - The company reported limited impact from the flooding, with only three stores affected, which are now back in business [33][94] Question: Competitive environment in fashion - Management noted strong sales growth in constant currency and mentioned currency impacts but expressed satisfaction with gross margin stability [35][37][98] Question: Online sales mix and delivery trends - Both store and online sales are growing, with online sales expected to continue increasing as part of the integrated model [41][105] Question: Targeting younger markets with Lefties and Z3D collection - Management sees opportunities across all segments and is satisfied with performance in various concepts, including Zara [44][110] Question: Wage growth impact on business - Operating expenses remain under control, with no specific concerns regarding wage growth for the upcoming year [48][114] Question: Strategy behind stand-alone Zara Man stores and The Apartment concept - The company is focused on improving customer experience and sees growth opportunities across different segments and concepts [50][117] Question: Evolution of CapEx and space growth - The company is on track with ordinary investments and logistics expansion, confirming positive net space growth in the first nine months [120][122]

Group 1 - Industria de Diseno Textil SA (IDEXY) is part of the Retail-Wholesale group, which consists of 212 companies and is currently ranked 8 in the Zacks Sector Rank [1] - IDEXY has a Zacks Rank of 2 (Buy), indicating a favorable outlook based on earnings estimates and revisions [1] - The stock has returned approximately 35.6% year-to-date, outperforming the average return of 20.4% for Retail-Wholesale companies [2] Group 2 - IDEXY belongs to the Retail - Apparel and Shoes industry, which includes 41 companies and is ranked 55 in the Zacks Industry Rank [3] - The Retail - Apparel and Shoes industry has gained about 7.1% this year, indicating that IDEXY is performing better than its peers in this specific group [3] - Another outperforming stock in the Retail-Wholesale sector is Burlington Stores (BURL), which has increased by 30% year-to-date [2]

Core Viewpoint - Growth investors are increasingly focusing on stocks with above-average financial growth, and finding such stocks can be challenging. Industria de Diseno Textil SA (IDEXY) is highlighted as a recommended growth stock due to its favorable Growth Score and top Zacks Rank [1]. Earnings Growth - Earnings growth is a critical factor for growth investors, with a historical EPS growth rate of 20.4% for Industria de Diseno Textil. The projected EPS growth for this year is 14.1%, surpassing the industry average of 11.1% [2]. Cash Flow Growth - The company exhibits a year-over-year cash flow growth of 23.6%, significantly higher than the industry average of -10.7%. Over the past 3-5 years, the annualized cash flow growth rate has been 11.3%, compared to the industry average of 5.7% [3]. Earnings Estimate Revisions - There has been a positive trend in earnings estimate revisions for Industria de Diseno Textil, with the current-year earnings estimates increasing by 0.9% over the past month. This trend contributes to its Zacks Rank of 2 and a Growth Score of A [4].

Group 1 - Industria de Diseno Textil SA (IDEXY) has gained approximately 33.3% year-to-date, outperforming the Retail-Wholesale sector's average return of 20.1% [4] - The Zacks Consensus Estimate for IDEXY's full-year earnings has increased by 2.1% over the past quarter, indicating improved analyst sentiment and a stronger earnings outlook [4] - IDEXY currently holds a Zacks Rank of 1 (Strong Buy), suggesting it is poised to outperform the broader market in the next one to three months [3] Group 2 - IDEXY belongs to the Retail - Apparel and Shoes industry, which includes 41 companies and has an average gain of 11.6% this year, indicating IDEXY's superior performance [6] - Burlington Stores (BURL), another stock in the Retail-Wholesale sector, has returned 29.4% year-to-date and has a Zacks Rank of 2 (Buy) [5] - The Retail - Discount Stores industry, which includes Burlington Stores, has seen an average increase of 18.5% this year, ranking it 217 in the Zacks Industry Rank [7]

Core Viewpoint - Growth stocks are appealing due to their potential for above-average financial growth, but identifying stocks that can fulfill their growth potential is challenging due to associated risks and volatility [1] Group 1: Company Overview - Industria de Diseno Textil SA (IDEXY) is currently recommended as a growth stock by the Zacks Growth Style Score system, which evaluates a company's genuine growth prospects [2] - The company holds a favorable Growth Score and a top Zacks Rank, indicating strong growth potential [2] Group 2: Earnings Growth - The historical EPS growth rate for Industria de Diseno Textil is 20.4%, with projected EPS growth of 14.4% this year, surpassing the industry average of 10.9% [4] - Double-digit earnings growth is preferred by growth investors, indicating strong prospects for stock price gains [3] Group 3: Cash Flow Growth - The year-over-year cash flow growth for Industria de Diseno Textil is 23.6%, significantly higher than the industry average of -10.7% [5] - The company's annualized cash flow growth rate over the past 3-5 years is 11.3%, compared to the industry average of 5.7% [6] Group 4: Earnings Estimate Revisions - Current-year earnings estimates for Industria de Diseno Textil have been revised upward, with the Zacks Consensus Estimate increasing by 1.4% over the past month [8] - Positive trends in earnings estimate revisions correlate strongly with near-term stock price movements, supporting the stock's favorable outlook [7] Group 5: Investment Positioning - The combination of a Zacks Rank 1 and a Growth Score of A positions Industria de Diseno Textil well for outperformance, making it an attractive option for growth investors [9]

Core Viewpoint - Industria de Diseno Textil SA (IDEXY) has received a Zacks Rank 1 (Strong Buy) upgrade, indicating a positive outlook on its earnings estimates, which is a significant factor influencing stock prices [1][4]. Earnings Estimates and Revisions - The Zacks rating system focuses on the consensus measure of EPS estimates from sell-side analysts, which reflects the changing earnings picture of a company [2]. - The Zacks Consensus Estimate for Industria de Diseno Textil is projected to be $1.08 per share for the fiscal year ending January 2025, representing a year-over-year increase of 14.9% [9]. - Over the past three months, the Zacks Consensus Estimate for the company has increased by 2.4%, indicating a positive trend in earnings estimates [9]. Impact on Stock Prices - Changes in a company's future earnings potential, as indicated by earnings estimate revisions, are strongly correlated with near-term stock price movements [5]. - The Zacks rating upgrade for Industria de Diseno Textil suggests an improvement in the company's underlying business, which could lead to increased buying pressure and a rise in stock price [6][11]. Zacks Rank System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with Zacks Rank 1 stocks historically generating an average annual return of +25% since 1988 [8]. - Only the top 5% of Zacks-covered stocks receive a 'Strong Buy' rating, indicating superior earnings estimate revision features, which positions Industria de Diseno Textil for potential market-beating returns [10][11].

Core Insights - Investors in the Retail - Apparel and Shoes sector may consider Industria de Diseno Textil SA (IDEXY) or Deckers (DECK) for potential value opportunities [1] Valuation Metrics - IDEXY has a Zacks Rank of 2 (Buy), indicating a more favorable earnings estimate revision trend compared to DECK, which has a Zacks Rank of 3 (Hold) [3] - IDEXY's forward P/E ratio is 27.23, while DECK's forward P/E ratio is 29.85, suggesting IDEXY may be more attractively priced [5] - The PEG ratio for IDEXY is 2.16, compared to DECK's PEG ratio of 2.76, indicating IDEXY's expected earnings growth is more favorable relative to its valuation [5] - IDEXY has a P/B ratio of 10.34, while DECK's P/B ratio is 11.44, further supporting IDEXY's valuation advantage [6] - Based on these metrics, IDEXY has a Value grade of B, while DECK has a Value grade of C, highlighting IDEXY as the superior value option [6]

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