The situation in Russia could take another turn of the script after the decision of . As announced yesterday by the Swedish multinational, the temporary closure of stores has given way to its departure from the country and the impact on results will be applied to the accounts for the third quarter (it is calculated at around 33.4 million euros of profits that will be perceive). The point is that analysts do not rule out that firms like Inditex may also follow in their footsteps.
Nike and McDonald’s already did. Credit Suisse calculates that 6% of the Galician group’s sales came from Russia in the 2021 financial year, which is the equivalent of 1,660 million euros. In the case of H&M, the weight of the ex-Soviet country on its income is 5%; while for others like Adidas and Puma it is 3% of the total.
“With very little chance of operating in Russia again, we assume that the exit may be inevitable when the time comes. For Inditex, given the low levels of inventories in the country, its departure could be more challenging because it would require local funds to finance it” , affirm from Credit Suisse. From the Galician textile they prefer not to comment on it and refer to the relevant event of last March in which the stoppage of activity was communicated to the market, once it had been announced by large European chains, including H&M.
In the case of the Swedish firm, the exit from Russia will cost 191 million euros and another 96 million in cash flows, according to Bloomberg. The country governed by the dictator Vladimir Putin represents 8.5% of the ebit for Inditex, to which another 1.5% of Ukraine should be added. In total, almost 430 million euros of operating profit before interest and taxes, according to the group’s annual report for 2021, which it generates in the 600 stores that the group has between Russia (with 515) and Ukraine (with 85).
In any case, the consensus of analysts expects that Inditex will be able to overcome the broken one left by Russia with a profit of 3,800 million in 2022, the highest in its history and above pre-Covid levels. Inditex will present its semi-annual accounts in September. By then, a profit of close to 1,800 million euros is expected, 400 above pre-pandemic, 28% more.
However, the Galician company has been making a comeback in the stock market in recent weeks thanks to the improvement in Fast Retailing’s forecasts on July 14. The Japanese increased its forecasts for this year to 2,100 million euros of operating profit, 7% more. This has led Inditex shares to rise almost 5% in the last two sessions, and 13% since the beginning of July, compared to 7% for H&M and 10% for the European retail sector.
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