Apr 5, 2018
Inditex paid out almost 10% of its sales in rent in 2017
Apr 5, 2018
Inditex paid almost 2,360 million euros in rent on locations around the world in 2017, 9.3% of its sales for the year, which totaled 23,336 million euros according to data provided by the company to the Spanish National Securities Market Commission.
In total, the Galician group reported an expense of 2,360 million euros in operating leases in 2017, compared to the 2,221 million spent in the prior year, an increase of 6.1%.
The company's leasing expenses correspond principally to the locations it rents to carry out its commercial activities through operating leases.
In some situations, mall promoters or the owners of rental properties make contributions toward the group which function as leasing incentives and also have an effect on results during the rental period.
As for the duration of the contracts, here again there are a number of different situations, although, generally, they have an initial duration of between 10 and 15 years. Likewise, in most cases, the tenant has the power to renew the lease and extend the tenancy period.
Inditex reported a net profit of 3,368 million euros in fiscal 2017 (February 1, 2017 to January 31, 2018), a 7% increase compared to the previous year.
The group's sales reached 25,336 million euros, growing 9%, while gross operating profit (EBITDA) came to 5,277 million euros, compared to 5,083 million in the prior year, a 4% rise.
For this year, the textiles giant is expecting to open between 350 and 400 locations and absorb around 200 units. Looking pas 2018, the company is hoping to grow its space in key locations between 4% and 6% while also developing its global online presence.
For 2018, the total value of common stock is predicted to be around 1,500 million euros, in accordance with the company's program of store openings in key locations. The company also expects lower growth in stock than in space in the next few years.
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