Inditex suffered Wednesday a strong blow in Bag after investment bank Morgan Stanley issues a report that cut target price of actions of galician company from 26 to 21 euros, up 19%, due to “growing pressures” faced, which will affect ir growth. The shares of parent of Zara, Massimo Dutti or Stradivarius is left up 5.6% on parquet floor, up close in 26,69 euro, even more than five euros above new valuation of Morgan Stanley. The company of Amancio Ortega has left more than 5,000 million of market capitalization. Since start of year, has lost 6%.
For first time, report of us investment bank revises its recommendation and move it from “hold” to “infraponderar” (to reduce weight of Inditex in an investment portfolio). Says Morgan Stanley that “you don't feel comfortable ignoring growing pressures facing company”, which will present results of first semester on 12th of September.
Promises to bank that Inditex alone will grow at an annual rate of 4% in next five years, well below 12% forecast by or analysts. “Every time is more sensitive to foreign exchange, has recorded falls in margins in last five years and faces same pressures to change channel that majority of or textile groups,” says report, entitled " Going from Great to Good (great to good).
he Adds that textile group gallego will be a “gradual drop” and provides for rebates future of qualification. Believes that, in spite of to remain one of world leaders in textile sector and have registered outstanding performance in last 15 years, warns you that your “investment proposal has been weakened during last years”, although still “not reflected adequately” in forecasts of analysts or market.
this is Not first time this year that Inditex suffers a meltdown seriously in Bag. On 23rd of February saw yet anor fateful day, this time by a report from JP Morgan that provided for a “slowdown” of your business for meteorology and effect of currency.
ChallengesWhat is certain is that Inditex has continued to build record sales and profits in recent quarters, but its growth has slowed. In first quarter of this year, recorded a sales value of 5.654 billion euros, barely 1.52% more than in same period of previous year, lowest rate in two decades. In addition, it has been reducing number of stores in its main markets, although it stresses that it is "optimizing" surface of sales: closes stores small, opens or larger (flagships), which increases surface area of sales.
Although it is largest textile company in world by turnover, Inditex faces, as well as ors, to an environment very changeable. A wear unpredictable, with autumns long and warm or mild winters that are prolonged, which has sometimes led to lack of synchronization with customer demand at certain times of year, has weighed on accounts of many firms. You also have to face phenomenon of e-commerce reduces margins, having to add cost of logistics. The new technology that y are incorporating in stores, and reforms required of a consumer increasingly reluctant to go shopping also impact on results.
this is Not first time this year that Inditex suffers a meltdown seriously in Bag. On 23rd of February saw yet anor fateful day, blamed publication of anor report, this time from JP Morgan, which provided for a “slowdown” of business of Inditex by wear and effect of currency, so that reduce target price of action. In days that followed, in early march, action of Inditex touched ground in of 23.6 euros. Since n, y had soared to over 30 euros in month of July. Since n, share price had followed a path descendant that accentuates this Wednesday with report of Morgan Stanley.
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- Inditex achieved anor record of sales, but lowest growth in at least two decades
