Inditex(IDEXY) - 2019 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - In 2019, net sales grew by 8% to €28.3 billion, gross profit increased by 7% to €15.8 billion, and net income rose by 6% to €3.6 billion [17][19] - Like-for-like sales growth was 6.5%, with online sales increasing by 23% to €3.9 billion, accounting for 14% of group sales [9][12] - The company reported a net cash position of €8.1 billion, reflecting a 20% increase [24] Business Line Data and Key Metrics Changes - The integrated business model contributed to strong sales growth, with positive like-for-like sales across all geographic areas [10][19] - Gross margin reached 55.9%, a decrease of 79 basis points, but would have increased to 56.9% excluding the inventory provision [19][20] Market Data and Key Metrics Changes - Online sales were particularly strong, with significant growth in various markets, including new online launches in multiple countries [12] - The impact of COVID-19 led to a temporary decrease in store and online sales by 4.9% from February 1 to March 16, 2020, and a 24.1% decrease from March 1 to March 16, 2020 [15] Company Strategy and Development Direction - The company remains focused on expanding its fully integrated store and online platform, emphasizing a unique customer experience [7][8] - The long-term strategy includes significant global growth opportunities, despite the current challenges posed by the pandemic [28] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the business model and long-term potential, despite the immediate impact of COVID-19 [7][27] - The company anticipates a sustainable underlying like-for-like sales growth of 4% to 6% going forward, but refrained from providing full-year guidance for 2020 [27] Other Important Information - An inventory provision of €287 million was made to account for potential impacts of COVID-19 on the net realizable value of inventory [18][20] - The company is reviewing its plans for 2020 due to the uncertain situation, delaying guidance on space growth and like-for-like sales [47] Q&A Session Summary Question: Online business distribution cost and margin structure - Management highlighted strong online sales growth of 23% and emphasized the importance of a fully integrated approach [32][34] Question: Inventory provision assumptions and logistics impact - Management explained the inventory provision was based on current information and emphasized the flexibility of the business model [42][40] Question: Space guidance and online sales in China - Management stated it is too early to provide space growth guidance for 2020 and confirmed that online business continued to operate during store closures in China [48][49] Question: Government support and rent relief discussions - Management preferred not to elaborate on specific market conditions but assured that decisions would consider all stakeholders involved [52] Question: Operating expenses flexibility and employee payments - Management confirmed a flexible operating expense structure but refrained from discussing specific percentages at this time [57]