Russia is putting in a compromise. It is the company within the Ibex 35 that has fallen the most in the markets since the beginning of 2022, only behind Fluidra. The price of its share has fallen by 25.8% in the accumulated year and since the war in Ukraine began its value has suffered due to the exposure of the Spanish textile giant to the Russian market, the second most relevant for the firm Arteixo by number of stores, with more than 500.
After H&M’s decision on Wednesday and Mango’s yesterday to temporarily close in Russia, the question now is to know what the Spanish firm will do and how it will impact its results, while other renowned companies, such as Ikea, also from the most extensive of the world.
Since Vladimir Putin began the invasion last Thursday, Inditex has seen its share price sink more than 14%, which led the largest listed company of the Spanish selective to register its worst month in February since March 2020 , when its collapse was linked to the outbreak of the coronavirus.
It is not being a good year for the Spanish textile company on the stock market, although its falls come from further back. Since November 2021, maximums for that year at 32.27 euros per title, . And yet, the market consensus collected by FactSet still does not reflect how the war may affect their accounts. With the latest estimates collected by the experts who follow the company, Inditex would once again recover in its 2021-22 fiscal year financial results similar to those reported in 2019, prior to the impact of Covid with an ebitda of 7,645 million euros for the last year, half a percentage point more than those recorded in 2019.
While waiting for the Arteixo-based company to present its accounts, the forecast is that its net profit will exceed 3,650 million euros, already above pre-pandemic levels, with EBIT margins of more than 17%, the first time that would happen since 2018. .
On the other hand, the market consensus estimates that Inditex has a path of 50% from its current listing price -at 21.16 euros- to its target price at 32.19. Since the war in Ukraine began, four analysis firms have revised their forecasts for the Spanish textile company and in no case have they lowered their respective target prices.
Thus, Simon Irwin, of Credit Suisse, traditionally very negative towards the company, maintains his target price for Inditex at 26 euros, while Bestinver -one of the most optimistic among its peers- continues to believe that the company’s share can reach 38.7 euro. However, sources familiar with the market estimate that more updates will come in the near future that take into account the real impact on the sales of the group present in several key countries in the conflict.
Russia, the new question mark
its second market, with 527 stores -according to company data in its 2020 annual report, 102 of which are from Bershka and another 85 from Zara-, which together with the 72 in Ukraine and the 12 in Belarus represent almost 9 % of the total. This denotes the importance for the clientele group in these countries, given that despite online sales, physical stores continue to be important for Inditex. It is only surpassed by Spain with more than 1,400 establishments.
On Wednesday H&M -with 168 stores- and yesterday Mango -with 120 establishments, representing 5% of the total of more than 2,300- decided to close their stores in Russia temporarily, as both firms clarified in a statement, but the truth is it is that they put Inditex at a crossroads that forces Marta Ortega to make a decision. At the moment, the company does not comment on the matter.
Facebook Comments
Disqus