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Industria De Diseno Textil SA - Stock Quote ITX

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Morningstar's Industria De Diseno Textil SA Stock Analysis

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Market Correction Creates Opportunities in Apparel and Luxury Segment; Inditex Our Best Idea

Jelena Sokolova, CFA Senior Equity Analyst

Analyst Note

| Jelena Sokolova, CFA |

Concerns about the impact of inflation on consumer spending, rising interest rates, Russia-Ukraine conflict and lockdowns in China have put pressure on shares across our luxury and apparel coverage. We see these changes as either manageable (the sector has limited exposure to Russia and Ukraine) or transitory (Chinese demand recovered quickly after previous lockdowns). Historically, the luxury industry grew prices ahead of the consumer price index and while it was not the case for general apparel the strongest firms, such as narrow-moat Inditex, are well placed to take market share under strenuous conditions (as the coronavirus experience has shown).

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Industria De Diseno Textil SA's Company Profile

Business Description

Inditex is a multibrand fashion conglomerate, founded in 1985. Zara is its flagship brand (including Zara Home), generating just under 70% of revenue and just over 70% of profits. Other brands include Pull & Bear, Massimo Dutti, Bershka, Stradivarius, Oysho, and Uterque. The company operates through 7,000-plus stores globally, over 2,000 of them belonging to the Zara brand. Sixty-five percent of revenue is generated in the European home market, while the Americas and Asia contribute 16% and 19%, respectively. The company keeps design in house while mostly outsourcing manufacturing (own manufacturing constitutes only a low-single-digit percentage of output). Over 50% of sourcing factories are in proximity to the company’s headquarters in Spain.

Edificio Inditex, Avenida de la Diputación
Arteixo, 15142, Spain
T +34 981185400
Sector Consumer Cyclical
Industry Apparel Retail
Most Recent Earnings Jan 31, 2022
Fiscal Year End Jan 31, 2022
Stock Type
Employees 165,042

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