Good morning to everybody. We'd like to thank you all for attending Inditex's Full Year 2024 Results Presentation. My name is James O'Shaughnessy, Investor Relations. This presentation will be hosted by our CEO, Óscar García-Maceiras, as well as our CFO, Ignacio Fernández. I'd like to welcome our new Director of Investor Relations, Gorka García-Tapia , who many of you will get to meet over the next few weeks. As per usual, this presentation will be followed by a question-and-answer session, which will commence with telephone questions, and will then be followed by any questions from the webcast platform. Let's take this disclaimer on your screens right now as read. Now, over to you, Óscar.
Good morning and welcome to our full year 2024 results presentation. I am happy to see so many people joining us today. In 2024, Inditex saw a very solid performance. This performance was driven very much by the creativity of our teams and the strong execution of our fully integrated business model. The sales growth of 7.5% has been excellent and is a clear demonstration that the demand for our collections has been consistently strong across the whole year. This sales performance has allowed us to reach new highs in terms of EBITDA and net income. It's, of course, the consistently and strong execution of the unique business model that you have all come to know that has driven the gross margin performance and has led us to also control costs so well. At the bottom line, net income increased 9% to EUR 5.9 billion.
The same operating performance over the period has served to further reinforce the solid financial position we find ourselves in, as illustrated by the significant levels of free cash flow generated. As a result of this, I am happy to say that we intend to propose a dividend increase of 9% for financial year 2024 to EUR 1.68 per share. Spring-summer collections have been well received by our customers. Store and online sales in constant currency between the 1st of February and the 10th of March, adjusting for the extra trading day in February due to the leap year, grew 4% over the same period in the previous year. In the last commercial week, store and online sales in constant currency increased 7%. We can all agree that it's our fully integrated store and online model that has been the main driver of the strong performance we have seen recently.
This performance relies on the four key pillars that we have highlighted to you in past occasions: our product offering, a unique customer experience, our focus on sustainability, and the talent and commitment of our people. These are the principal factors driving our ability to differentiate ourselves so consistently. We have operations across 214 markets, and we enjoy a low market share within what continues to be a highly fragmented sector. This is what underpins the excellent growth opportunities we have before us. We have a strong commitment to profitable growth. Since the end of fiscal year 2022, Inditex has experienced a significant increase in sales and productivity. Sales have grown 19% on a reported basis in the period, with 4% less stores. We maintain the previous guidance for gross space growth that we mentioned last year of 5% for the period 2024 to 2026.
The logistic expansion plan 2024 to 2025 we have already set out is on track. We continue to focus the ordinary capital expenditure on our global store base, the online platform, and the rollout of technology programs aimed at enhancing the level of integration. Ordinary capital expenditure in 2025 is estimated in EUR 1.8 billion. I'm going to take the opportunity to pass you to Ignacio in order to cover some of the financials.
Thank you, Óscar. As you can see from the release earlier this morning, Inditex has performed very well over 2024. Óscar has commented that sales, EBITDA, and net income all reached record highs. The sales performance has been strong, at +7.5%. The supply chain has been actively managed, which in turn produced a very healthy gross margin. Operating expenses have, of course, been well managed, and this has resulted in a satisfactory level of operating leverage. Consequently, EBITDA grew 8.9% to EUR 10.7 billion. This has flowed through to the bottom line, with net income increasing 9% to EUR 5.9 billion. The group continues to generate significant free cash flow, and this has taken our net cap position to EUR 11.5 billion. Let me reiterate that sales have progressed very well at +7.5%, reaching EUR 38.6 billion. That translates into +10.5% in constant currency.
This strong growth was very broad-based and was driven by both store sales and online sales and all the concepts. Looking forward now, at current exchange rate, we expect a -1% total line FX impact in 2025. As already mentioned, sales were positive in all concepts. We do, of course, enjoy a global presence, and it is our aim to continue building upon this. In 2024, gross profit increased 7.6% to EUR 22.3 billion, with a gross margin of 57.8%. The achieved gross margin illustrates well the level at which the business model has performed over the period. For this upcoming year, 2025, a stable gross margin of plus or minus 50 basis points could be a reasonable expectation. Respecting the operating performance of the group over the period as a whole, operating expenses have been well controlled across all business areas.
Operating expenses have grown below the rate of sales growth over 2024. If you include all these charges in the calculation, operating expenses grew 126 basis points below sales growth, demonstrating good operating leverage. From what we have been talking about already, you will see that we are quite happy with the operating performance of the business over 2024. The inventory position for the group, as at the end of the period, was up 12% compared to the closing position the year before. Current inventory balance was up 6% versus the same date in 2024. It's important to point out that this closing inventory is of high quality. The strong cash flow generation in the year has resulted in a growth of the net cap position of 1% to EUR 11.5 billion. As you can see, funds from operations after fixed lease cash payments reached an all-time high of EUR 7.7 billion.
Now, before I pass you over, let me take this opportunity again to say welcome to Gorka García-Tapia . Gorka, please.
Thank you, Ignacio. I'm very happy to be here today. Building on Ignacio's comments, I want to emphasize that 2024 was a truly outstanding year for our business. We achieved strong performance across all concepts, which was driven by strategic execution and consistent focus on customer experience. Over the year, we expanded our global footprint, opening new stores in 47 markets, and we did this while also driving significant growth in both store sales and online channels. All of the concepts continue to deliver strong results, and our younger concepts continue to exceed expectations, contributing meaningfully to the overall performance. This momentum reflects the strength of our diversified portfolio and our team's ability to execute with precision. Looking ahead, we are confident in our ability to capitalize on new opportunities and to deliver sustainable growth. On the screen right now, you can see a very healthy set of metrics.
This table is a good representation of the group's diversification by both product and customer base. Let me just highlight a couple of these key metrics. Our group's PBT margin has increased 50 basis points to 19.6%, and as you can see, return on capital employed has increased 101 basis points to 40%. With all these achievements in mind, I'll now hand it over to Óscar.
Thanks, Gorka. We continue to see strong growth opportunities. We have a unique capacity to react to fashion trends, and this reinforces our unique market position, providing us with great potential for the future. Our diversification of origins, channels, formats, and markets remains a key driver of our model. In order to extend our differentiation further, we are developing a number of important initiatives for the coming years. Our fashion proposition shows our strong commitment to creativity, thanks to our talented team that is focused every day on innovation and the adaptation to what our customers are looking for. Our physical store and online platforms are continuously executing new initiatives to enhance the experience of our customers. Openings, additional functionalities, and new technology are at the core of our strategy. Amongst the stores that will open, we have third stores in Nanjing, Eindhoven Rechtestraat , Osaka Makita, and Zurich Bahnhofstrasse.
The recent opening of our first Bershka store in India, in Mumbai Palladium, has received great feedback from customers. There will also be a new Pull&Bear store in Oxford Street, London. In 2024, we completed the rollout of the new Softag technology at Zara. The rollout continues with the other concepts, starting in Bershka and Pull&Bear this year. This new technology is a significant improvement in customer experience, facilitating interaction with our products and improving the purchasing process. By the end of 2024, 73% of the textile fibers used in manufacturing our garments were lower impact fibers. Our goal is to reach 100% use of lower impact textile fibers by 2030. With a view to that objective, we are investing in innovation with a particular focus on textile-to-textile recycled fibers.
Through our sustainability innovation hub, we are working with 300 startups to incorporate new materials, improving production processes and making progress in aspects of traceability, packaging use, and end of life. Furthermore, it has delivered the application of fibers through more than 30 pilot programs and the seed funding of startups such as the ones we executed in 2024: Infinited Fiber, Galy, and Epoch. The progress made in fibers and the initial results of our supply chain environmental transformation plan have allowed us to reduce our scope 1, 2, and 3 greenhouse gas emissions target by a further 5% compared to 2018. Our own emissions have been reduced by up to 88% in the same period. We will continue to promote the talent and commitment of our teams in order to reinforce our attractiveness as a benchmark employer.
At Inditex, we believe that the training and growth of our people form the basis of our transformation and provide a driving force for innovation. During 2024, around 3.3 million hours of training have been provided to our teams. We aim to open opportunities for all people. There are now currently more than 3,100 people with some type of disability employed in Inditex stores, logistic facilities, factories, and head office teams around the world. This is more than twice the number of people who worked in the group three years ago, in line with our public commitment. We now operate in 214 markets. Most of those markets in which we operate continue to be very fragmented in nature, and in conjunction with the low market share we have in these markets, this provides a great platform for strong growth for the future.
To meet the current strong demand for our collections across the globe, a demand which, if you remember, builds upon the meaningful levels of growth we have seen since 2022, we are undertaking several initiatives. Firstly, optimization of stores is ongoing. The growth of annual gross space in 2025-2026 is expected to be around 5%. We also expect net space contribution to sales to be positive in the period 2025-2026, with, of course, an additional good level of online sales growth. We are planning investments that will scale our capabilities, obtain efficiencies, and increase our competitive differentiation to the next level. For 2025, we estimate ordinary capital expenditure of around EUR 1.8 billion. This investment will be mainly directed at optimization of our commercial space, the integration of several technological initiatives, and the improvement of our online platforms.
The extraordinary logistic expansion plan for 2024 and 2025 is on track. This two-year extraordinary investment program focused on the expansion of the business allocates EUR 900 million per year to increase logistic capacities in each of the 2024 and 2025 financial years. For Zara, our new 286,000 square meters distribution center, Zaragoza II, will be up and running in summer of this year. The objective of this logistics expansion plan is to strengthen Inditex's capacity to capture the ample global growth opportunities in the medium and long term. These investments will have the highest standards of sustainability and use the most up-to-date technology. I'm going to finish with a couple of comments on our current performance. Spring summer collections have been well received by our customers.
Store and online sales in custom currency between the 1st of February and the 10th of March, adjusting for the extra trading day in February due to the leap year, grew 4% over the same period in the previous year. In the last commercial week, store and online sales in custom currency increased 7%. We have an attractive and predictable dividend policy, which consists of a 60% ordinary payout and bonus dividends. For financial year 2024, the Board of Directors will propose at the annual general meeting a dividend increase of 9% to EUR 1.68 per share, composed of an ordinary dividend of EUR 1.13 and a bonus dividend of EUR 0.55 per share. The dividend will be made up of two equal payments. On the 2nd of May 2025, a payment of EUR 0.84 per share, ordinary, and the remainder, EUR 0.84 per share, on the 3rd of November 2025.
Thank you all for attending today. That concludes our presentation. We would be happy to answer any questions you may have.
The telephone Q&A session starts now. If you would like to ask a question, please press star five on your telephone keypad. If you wish to withdraw your question, please press star five again. We request that you limit yourself to only one question per turn so we can maximize the number of participants in the session. If you have further queries, you may press star five again after the next person's question has been addressed. Please ensure your phone is not on mute. The first question goes to Richard Chamberlain from RBC . Go ahead, Richard.
Yeah, thanks, James. Morning, guys. I just got one question, please, on the Americas region. It looks like it's seen a little bit of an underlying slowdown, excluding FX, in the most recent period. I wondered if you could just comment on the outlook there for the Americas and what you're expecting also in terms of space plans and store expansion in the Americas region. Thank you.
Hi, Richard. Thank you for your question. Firstly, I'd just like to highlight, you know, we break out the sales by four regions, and all regions at constant currency have had positive growth. With regards to the Americas, of course, you have to consider that there's a lot of different markets that make up this group. Some of them, for example, Brazil or Mexico, have had a more significant FX headwind, which has been compensated to another extent, for example, from the dollar sales. With regards to the growth in the region, I think we're seeing some numbers that are very interesting but impacted by FX.
Perhaps I could take the opportunity to highlight a little bit some of the projects that we're going to be doing in the US, and that gives you a little bit of color as to what our expectations are going forward. You know that the U.S. is a strategic market for us, and we've been very active during 2024, not only on openings, for example, Massimo Dutti Aventura Mall in Miami or Zara Frisco in Dallas, but also we've done a series of enlargements and relocations, for example, Skokie, Chicago, Greenwich, and Kennett, and in LA, we've also had the Topanga enlargement and relocation. We also are doing a series of different projects that we've mentioned over the past years, those 30 projects that we had discussed. I think all of those are on track.
Just to give you a little bit of an update on that, 11 projects have already been executed in 2024. We have eight projects planned for 2025. In particular, I'd like to highlight in LA The Grove, for example, or Brea Mall as well. We have another 13 projects planned further out in 2026. We are seeing a lot of growth in the region in general. Thank you.
The next question comes from Geoff Lowery from Redburn. Go ahead, Geoff.
Good morning. A similar question, really. Could you help us understand the constant currency growth rate of Zara in particular, and how much of the 5% or so gross space that you expect this year is going to benefit Zara as opposed to the non-Zara formats? Thank you.
Thank you. I think what we could tell you is that during the presentation, for example, we mentioned that we're confident with our 5% growth space for 2025, and you should also see this coming in through for 2026. Ultimately, you think about the store optimization program we have has really been driving a lot of productivity. Just to give you an example, between 2019 and 2024, sales per square meter excluding online sales were 28% higher. The store absorption programs are also leading to working capital benefits in terms of more efficient use of inventory. In 2024, for example, we opened 257 new stores, and we refurbished, enlarged 254 stores, and we absorbed 386 stores, which is in line with the store optimization that we've done.
At constant currencies, what we can tell you is that we've seen growth in all of the regions and all of the concepts, and that we're quite comfortable going forward. Thank you.
The next question comes from Georgina Johanan from JPMorgan . Go ahead, Georgina.
Hi, good morning, everyone. Thank you. Obviously, that recent trading number is a little bit of a step down versus what you've been doing through 2024. You know, of course, appreciate that you're now on a more difficult comparative, but perhaps you could just give some color in terms of what you're seeing sort of by region. Has there been any change in the consumer? Also, you called out that cadence in the exit rate, the plus 7%. Is that to do with when particular products landing? You know, what do you think is driving that? Any color would be really helpful, please. Thank you.
Thank you, Georgina. This period represents a small part of the year at the beginning of the season, and as you mentioned, with high comparables last two years. As was mentioned during the presentation, growth has accelerated as plus 7% in the last commercial week. Spring summer collections are being well received by customers. What I can share with you is that we are confident in our execution for the year ahead and fully focused on increasing the level of differentiation of the business model. Having such a robust business model that you know very well, that has a global presence in a highly fragmented sector and that has been capable to react to fashion trends, allows us to keep on having very satisfactory figures.
The next question comes from Sreedhar Mahamkali from UBS. Go ahead, Sreedhar.
Hi, good morning. Thank you for taking my questions. Just in terms of the gross space guidance, you've already helped us with the 5% guidance. How should we think about what you referred to, Óscar, in terms of medium-term and long-term growth aspirations, particularly once the new logistics capacity becomes available? Is the 5% the growth rate we should be anticipating into the medium term, or you signal a potential sort of step up in that growth space cadence?
Thank you. I think we set it out quite clearly during the presentation. Our expectations for 2025 and 2026 are at 5% growth, gross space growth. That is the guidance that we can give you for now. Consider that in the last two years with 5% gross growth space, we have actually achieved around 2% net space growth. I hope that is helpful. Thank you.
The next question comes from William Woods from Bernstein. Go ahead, William.
Good morning. Thank you for taking the question. When you look at the other concepts, so Stradivarius, Bershka, and Massimo Dutti, you've seen a lot of good strengths in the margins there. What's driven this margin strength? Do you think the rollout of Softag into some of the other concepts will help us further? Thanks.
Thank you. We are very happy with the performance of our different concepts, including, of course, Zara. By the way, this 2025, we will celebrate the 50th anniversary since the opening of our first Zara store here in A Coruña. The rest of the formats are performing very well, further diversifying our customer base and product offering, and that's critical for our model. Relying on the pillars of our business model, we see many, many opportunities for future growth. With that in mind, we are expanding physical footprint of the formats to new markets. As an example of this, Bershka has just opened its first store in India, Mumbai Palladium. Gorka referred to the opening of the first Massimo Dutti store in Aventura Mall in Miami in the US in 2024. Bershka will enter this year in Sweden.
The Netherlands and Germany, for instance, will be new markets for Oysho or Austria for Stradivarius.
The next question comes from Warwick Okines from BNP . Go ahead, Warwick.
Thanks. Morning, everyone. Question on the Americas again. Is the U.S. still your largest market outside of Spain by revenues, and what actions are you taking related to changing tariff regimes?
The current environment is difficult to predict in terms of tariffs. Of course, we are continuously monitoring the situation. However, we consider that we are in a very good position due to our levels of geographical diversification in terms of sourcing and sales. As we operate in many markets, we have experience dealing with different tariff regimes. We have also a flexible business model with a competitive advantage due to our proximity sourcing that allows us to adapt. Therefore, we have confirmed our guidance for 2025 of a stable gross margin plus minus 50 basis points.
The next question comes from James Grzinic from Jefferies. Go ahead, James.
Yes, good morning. Thank you, James. Just a quick one, really. Do you think that seeing revenue growth exceeding office growth is a feasible ambition and working assumption for the coming year as well, as we saw last year?
Great. Thank you, James, for your question. I mean, first, I'd like to start by saying that it all starts with the strong execution of our business model. If we get that right, that'll flow down through the different lines of the P&L, right? Having said that, I'd also like to highlight that we have a very strong focus, as you know, with regards to operating expenses growing below sales growth. In essence, it's in our own DNA, right? Maybe I can give you a little bit of color with regards to the OpEx and what we're seeing. With regards to personnel expenses, for example, as you know, and I think we've mentioned it in the past, we have a variable component, which is subject to performance, which can provide us a lot of flexibility in the future.
We're also seeing a lot of efficiencies and benefits that are coming through different technologies that we're implementing. If you think about, for example, self-checkouts or the Softag's RFID in the larger stores, all of that has really driven a lot of efficiencies, allowing us to reinvest a lot of the time that we're obtaining into improving the customer experience. All of this, of course, in turn, is driving even further productivity in terms of sales at the stores. Finally, I'd just like to highlight the fact that over the last few years, we've been getting some operating leverage with regards to lease costs, and I think you've seen that. This has to do with different reasons, right? One of them is the fact that, for example, in 2024, 30% of the lease contracts were renegotiated.
On average, for example, we have a break period of leases anywhere between two and a half and three years, and with contractual obligations of around 15 years. All of that, we think that gives us a lot of opportunities to have a strong control of the expenses. Thank you.
We're going to move over to the questions on the webcast platform now, the first of which relates to Softag technology. Given Zara has now fully implemented the new technology, can you comment on some of the learnings and some of the benefits you've experienced, please?
Thanks for the question. As we mentioned during our presentation, in 2024, we completed the rollout of the new Softag technology in Zara. We have already rolled out the hardware fully in Pull&Bear and Bershka stores globally and are now starting to introduce Softags in those concepts. This initiative is part of our continuous focus on improving our customer experience and innovating with new technology. It is important to highlight that this is not a standalone project, and it is a relevant improvement for the integration of store and online operations, enhancing the use of automated collection points, self-checkout terminals, and drop-off points for returns, for instance. The productivity benefits for all of these technologies, as Gorka has just mentioned, are reinvested to improve our customers' experience, and the feedback so far continues to be very positive.
The next question relates to the younger concepts, right? Perhaps you could give us some color on the performance of the concepts aside from Zara.
Thank you. I guess that we have just covered this question. We remain very happy with the performance of the different concepts of the different formats. For us, it's crucial to keep on diversifying the customer base and the product offering at what we see is many, many opportunities for keep on growing in the future, the performance of our different concepts included, including, of course, Zara.
The next question relates to the market of Spain. How can we explain the continued outperformance of Spain market where Zara already has a high market share?
We are very happy with our performance in Spain. I guess that's a clear example of how even in our more mature markets, the group continues to find growth opportunities. Our sales in 2024 grew almost 10%, building on the 2023 growth in Spain of 13%. Just a reminder, from 2019 to 2024 in Spain, we reached 31% higher sales with 31% fewer stores. Our store optimization program remains on track, and we keep on implementing new ways to improve the experience of our customers. Let me make some slight reference to one example that is our new standalone Zara Men store in Hermosilla, Madrid, that includes our first Zara Café. The existing space in the Zara store of Serrano will host, after the summer, a new D apartment, a collaboration between Zara Woman and Zara Home.
We continue to find opportunities for profitable growth in Spain for all of our concepts.
Thank you, Óscar. That concludes the webcast questions for today.
Thank you to all of those taking part in today's presentation. For any additional questions you may have, please get in touch with our investor relations department, and we look forward to speaking with you again in June. Thank you again.