Good morning to everybody. A warm welcome to all of those attending the presentation of Inditex's results for the interim three months, 2023. I am Marcos López, Capital Markets Director. The presentation will be chaired by Inditex's CEO, Óscar García Maceiras. Also with us is our CFO, Ignacio Fernández. The presentation will be followed by a Q&A session, starting with the questions received on the telephone, and then those received through the webcast platform. Before we start, we will take the disclaimer as read. Please, Óscar.
Good morning, welcome to our results presentation. It is my pleasure to join you today. In the first three months of 2023, Inditex has continued its very robust operating performance, driven very much by the creativity of our teams and the strong execution of our fully integrated business model. This performance relies on the four key pillars of our strategy you are very familiar with: our unique fashion proposition and optimized customer experience, our focus on sustainability, and the talent and commitment of our people. These factors have propelled our competitive differentiation. We have had a very satisfactory sales growth of 13%. The execution of the business model has also been very robust, with a healthy gross margin and disciplined cost management. On the bottom line, net income increased 54% to EUR 1.17 billion.
Our operating performance places us in a sound financial position. We have generated significant free cash flow. The performance has continued in the second quarter. Store and online sales in constant currencies between the 1st of May and 4th of June grew 16%. Let me highlight some key aspects for the year thus far, marked by a strong execution of the model. Our spring/summer collections have been very well received by our customers. Sales in constant currency increased 15%, with a strong growth in stores and online.
Sales were positive across all geographical areas, as well as in all the concepts. Our diversified presence in 213 markets with low market penetration allows us to enjoy significant global growth opportunities. We have complete confidence in the ability to grow this business due to our unique model, which, in turn, is driving our increasing differentiation. I will hand you over to Ignacio to go into the headline numbers.
Thank you, Óscar. As you have seen in our release, Inditex executed strongly in the interim three months of 2023. Sales have progressed well, up +13%. We have managed the supply chain actively, and this has driven a very healthy gross margin. Operating expenses have, of course, been managed rigorously, resulting in operating leverage. As a result, the EBITDA grew 14% to EUR 2.2 billion. Below this line, and for comparability reasons, it is worth noting the provision charge in the first quarter, 2022, relating to operation in the Russian Federation and Ukraine for EUR 216 million in that year.
We have also seen very strong progress in the net income line, with an increase of 54% to EUR 1.17 billion, versus EUR 760 million in the first quarter, 2022. For full comparability, net income, ex provision, in the first quarter, 2022, would have been EUR 940 million. We continue generating significant free cash flow, and this has taken our net cash position to EUR 10.5 billion. Let me reiterate that sales have progressed very nicely at +15%, reaching EUR 7.6 billion. That's 15% in constant currency. Sales growth was strong both in stores and online. Sales have been positive across all regions and concepts.
Based on current exchange rate, we expect a -2.5% currency impact on sales for the full year 2023. In the first quarter of 2023, gross profit increased 14% to reach EUR 4.6 billion, and clearly demonstrated a healthy execution of the business model. The gross margin reached 60.5%. Based on current information, we expect a stable gross margin of ±50 basis points this fiscal year. There has been very rigorous control of operating expenses across all departments and business areas. Operating expenses increased below sales growth over the first quarter of 2023. Including all lease charges, operating expenses grew 150 basis points below sales growth. Over the first quarter of the year, we experienced a robust operating performance.
We have also seen a normalization in supply chain conditions that have returned to previous levels. Due to these factors, Inditex's inventory, as of the 13th of April, was 5% higher. As a side note, the end of the period inventory is considered to be of high quality, while commitment levels have remained similar to last year's levels. As a result of the strong cash flow, the net cash position grew to EUR 10.5 billion. Now over to Marcos.
Thank you. Over the first quarter of 2023, the group has had a robust performance across the board. We are satisfied with the execution over the period. We have continued with expansion, and have opened stores in 17 different markets. The store and online sales across all concepts have been robust. The performance has been strong at all levels. Now back to you, Óscar.
Thank you, Marcos. I would like to comment on some of the initiatives this season, which have been driving the increasing levels of differentiation we are seeing today. First and foremost, our priority remains to always increase the appeal of our fashion proposition. Creativity, innovation, design, and quality are the defining features of our collections and a key focus across all our teams. A good example of this is Zara Woman Studio capsule, the Zara Man Spring-Summer collection, the Zara Kids swimwear collection, Zara Home's new Van Duysen drop, Pull&Bear's Limited Edition, Massimo Dutti's THE CAIRO DIARY collection, Bershka's collection for Spring-Summer 2023, Stradivarius' Welcome to the Countryside collection, and finally, Oysho's Linen collection. In terms of the customer experience, I would like to highlight some key projects of 2023.
Inditex started operations in Cambodia in May, with the opening of a Zara flagship store in Phnom Penh, and the launch of online sales in the market through zara.com/kh. A key recent project has been the new store design for Zara, created by our architectural studio, that integrates organically the most sophisticated interiors with the functional and digital sections, the fitting rooms, self-checkout areas, click and collect points, in-store silos, and stock rooms. This new Zara store design is featured in openings, enlargements, and relocations, such as Paris- Saint-Sulpice, London Stratford, Miami Dadeland, Mumbai Phoenix Palladium, and Johannesburg Sandton. A key project of the year has been the third enlargement of the Zara store at London Stratford to 5,500 sqm .
Just like all the other important flagship stores recently opened, it will include dedicated spaces for lingerie, shoes, and handbags, the leggings collection, the athletics collection, and newborns. It will also include all the features that allow a complete digital experience. Finally, the enlargement of the Zara store at Mumbai Palladium Phoenix. The store extends over 2,500 sqm , and will offer the latest fashion with the most up-to-date image. In terms of customer experience, it is important to highlight that the hardware to implement the new security technology, which eliminates the need for hard tags, will be available in all Zara stores globally by July. The aim is to launch a testing phase in the 2023 autumn-winter season. Now let's cover sustainability.
As per the sustainability roadmap goals, Inditex is on track to deliver upon all of the targets set for 2023 to 2025. Our strategy is particularly focused on two pillars: innovation through our sustainability innovation hub, and circularity. In 2022, Inditex made an investment in Circ, the fashion technology company that recycles textile waste back into new fibers, aimed at accelerating industrial-scale solutions towards circularity in the fashion sector. In April 2023, Zara partnered with Circ to launch a first-of-its-kind women's capsule collection made using recycled polyester and lyocell derived from the separation of polycotton textile waste. In terms of circularity, the Zara Pre-Owned platform, currently available in the United Kingdom, will reach France, Germany, and Spain in the second half of 2023.
Through this platform, we will continue helping our customers to extend the life cycle of the Zara garments through donation, repair, or resale, and will contribute to the reduction of waste. One of the priorities of our people strategy is to promote stimulating work environments, where the growth and ongoing learning of our teams is encouraged. Last year, more than 11,000 of our employees were promoted, and at the end of the first quarter, there were already more than 2,700 people who have been promoted internally. We have also invested almost 600,000 hours of training in the same period, as we are convinced that continuous learning contributes to the personal and professional development of our people. Let me now move to the outlook for 2023. We remain on track to deliver upon all of our long-term goals.
The talent, commitment, and passion of our teams all around the globe will always be key to our competitive edge. We offer a unique fashion proposition defined by creativity, innovation, design, and quality. The continuous optimization of the customer experience is key to our approach. The strength of the fully integrated business model that is operating at full pace has been clear in recent times. Inditex operates in 200 authentic markets with low share in a highly fragmented sector. We see plenty of opportunities for both organic growth and expansion. We see increased sales productivity in our stores going forward. Also expect the gross space growth in 2023 to be around 3%. Optimization of stores is ongoing. We expect space contribution to sales to be positive in 2023. Stable gross margins have always been a key focus for us.
We are planning investments that will scale our capabilities, generate efficiencies, and increase our competitive differentiation to the next level. For 2023, we estimate ordinary capital expenditure of around EUR 1.6 billion. A word on the dividend. As approved in March 2023, the board of directors will propose to the Annual General Meeting a dividend for 2022 of EUR 1.2. The dividend is composed of two equal payments of EUR 0.6 per share.
The first interim payment was made on the 2nd of May 2023, and the final dividend payment will be made on the 2nd of November 2023. I would like to finish with a brief comment on our current performance. Spring-summer collections continue to be very well received by our customers. Store and online sales in constant currency between the 1st of May and the 4th of June, 2023, increased 16%. Thank you all for attending. That concludes our presentation for today. 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. Thank you. The first question comes from Geoff Lowery from Redburn. Please go ahead, Geoff .
Good morning, team. Could you just talk about your future view of space? In particular, you've talked about 3% growth this year. Do you foresee a time in the future where that number could accelerate from here, given how fragmented the markets are and how low your market shares are? Thank you.
Thank you, Geoff. Yes, for this year, we have mentioned two things regarding space. First, that we were expecting 3% gross space growth. There will always be some optimization progress into a business, this is why we mentioned that we were expecting positive space contribution for the business in the year, this is very much what we expect going forward. What I would like to do with these numbers is to qualify that you've seen the strong growth across the board, in stores and online, in all the geographies, in all the concepts. What we have been stressing over recent years is that the very strong productivity of the space. Given the fact that we see very selective, strong growth opportunities in the 213 markets in which we operate, we continue to be very, very selective.
I would like to convey to you one key message. It is very much about the quality of the space we open and the possibility of that space to produce continuous growth with very strong productivity, more than the space growth number. For example, you can see that in this first quarter, most of the growth came through the, you know, through like-for-likes. Yes, we expect some positive growth coming forward, but it's very much the productivity of our full integrated store and online model that will drive the growth in the coming years.
Thank you. The next question comes from Anne Critchlow from Société Générale . Please go ahead, Anne.
Good morning, all. Thanks for taking my question. I just wondered which product areas at Zara were performing the strongest at present, you know, whether it's holiday wear or tailoring or occasion. What are you seeing? Thank you.
Again, the, and good morning. This links very much to my previous answer. As we have mentioned in the presentation, the quality of the sales of the company has been very, very strong. We've qualified that. It's all channels, both in stores and online, we're seeing a very strong growth. It's in all geographies. There is no one geography that is, you know, basically growing more or in a very different way to others, and all the concepts have had a very strong performance this quarter. I would like to highlight, two factors.
It's very much the creativity of our teams, the effort they make in terms of having the right quality, the right design, the right innovation, all the right products at the right time, and then the execution and the flexibility of our business model that are driving this outperformance.
The next question comes from Georgina Johanan from J.P. Morgan. Go ahead, Georgina.
Hi, good morning. Thank you for taking my question. My question is just on the gross margin, which was, of course, a great performance in the quarter. Just being mindful, the FX was probably quite a material drag in the quarter. I mean, I guess my first question is, could you confirm that? Then perhaps just help us understand, is it sort of supply chain normalization in terms of external factors and freights, et cetera, that was offsetting that? Is it more about internal initiatives and the Inditex business model, please? Thanks.
Again, I'm going to combine this with what I mentioned at the beginning. The main reason behind the strong gross margin this quarter is the execution. You know that in the gross margin, there are many, many factors. We can talk about markups, markdowns, currency, mix, et cetera, et cetera. Given the strong growth in sales at 13%, this is the main driver. As I mentioned, what is very, very relevant in this first quarter is the consistency of execution across the board. This is, again, why the gross margin has had this positive performance in this first quarter.
The next question comes from Nick Coulter here at Citi. Go ahead, Nick.
Thanks, James, and good morning. Thank you for the presentation. Apologies, a non-operational question, if I may, on the finance income. Should we expect that net positive to continue, or are there non-recurring factors or volatile factors that we need to consider for the rest of the year? Thank you.
In terms of the financial income, Nick, as you have mentioned, in this first quarter, we have a positive evolution, which is the result of the deals we are now achieving in the treasury. Obviously, the situation has changed versus the previous year. You should expect something similar for the coming quarters.
The next question comes from Richard Chamberlain at RBC. Go ahead, Richard.
Thanks, James. Morning, everyone. I wondered if you could just touch on the new security tech, eliminating the use of hard tags that you're bringing in later this year. When do you expect that to start to have a positive sales impact? Will that be rolled out to other formats, other banners, next year? Thank you.
Thank you, Richard. Well, as you know, customer experience is one of the key pillars for our business model. We consider that with this new technology, we will eliminating hard tags, we will improve the experience of customers in our stores. We are making good progress with the project, as we have already mentioned. First step is having the hardware in the stores. This is expected to be fully rolled out in Zara by July. Next step will be inserting the alarms in the garments. This will start during the autumn-winter collection. We are working very closely with our suppliers with this purpose. Of course, this project will be deployed in the rest of our formats going forward.
We'll now proceed to the webcast platform. I've had a couple of questions here today on the webcast platform. The first of which is: Can you please provide some comment on the growth in Spain, please?
Well, thank you. Well, as Marcos has already said, we are very happy with our performance this quarter. This performance has been positive in all key geographical areas, in all concepts, both online and in-store, and this continues over the second quarter. This situation is, of course, also predictable to our performance in Spain. We have continued to be very active here. Some examples of important projects undertaken recently are of our Zara stores in Plaza España, Madrid, or Juan de Austria in Valencia, or our new flagship Pull&Bear store in Gran Via in Madrid. New exciting projects will open in the coming months, such as our new Zara store in Plaza El Duque in Sevilla. Thanks to the optimization process, our current presence in Spain is with bigger, better, and nicer stores in super prime locations.
The next question relates to market specifically. Are there any comments you can provide, perhaps on China or the United States?
Well, the idea, the main idea that we are very happy about our performance is predictable for the U.S. and for China as well. You know that, for instance, in the U.S., we see significant opportunities for selective growth in the coming years with several projects already announced. In the case of China, we consider that fashion appetite continues to be strong there. Chinese customers demand fashion and are very happy with our proposition, China will remain as well as one of our core markets.
Thank you, Óscar. The next question relates to growth ambitions. Can you provide a little bit more detail on growth ambitions and perhaps a little bit more detail on the company's policy to take it to the next level?
Well, thank you. Well, I would say that we have already covered this extensively during the presentation, but to summarize and to share the main ideas, our model is currently operating at full pace. We continue to focus our attention on strengthening the main pillars of that model that is fully integrated. With this in mind, we consider that the crucial factor is our people. I would like to highlight that the talent, the passion, the commitment of our people every single day and in every store, in every logistics center, in every office around the world, is the main driver of our performance quarter after quarter. These same factors are critically pushing us to the next level by increasing the level of commercial differentiation and pursuing growth opportunities across all markets and across each of the concepts.
Thank you, Óscar. That concludes the webcast questions and the Q&A session.
Thank you to all of those participating in the presentation today. For any additional questions you may have, please get in touch with our capital markets department, and we will welcome you back in September for the first half 2023 results.