If we talk about Textile Design Industries or Inditex it is possible that many investors may not have heard of these companies, but if we talk about brands such as Zara, Pull & Bear, Stradivarius, Bershka or Oysho, these same investors may realise that we are talking about one of the world’s largest textile groups, that in just 35 years has obtained recognition and presence worldwide.

On March 10, Inditex presented its results for the year 2020, where we discovered a 70% decrease in its profits, which was weighed down by the pandemic and the restrictions that were imposed. A profit of €1.1 billion euros was obtained, abut the most worrying piece of data was the decrease in net profit during the fourth quarter, with a decrease of 53% with respect to the previous year despite the Christmas period. Despite this, the future outlook seems more positive, thanks to the advanced vaccination process and the progressive return to normality, where little by little consumption will recover, thus supporting the sale of textiles.

At the beginning of today’s session, we learned the results for the first fiscal quarter of this company, where we could see that it had recovered the path of profit after obtaining a net profit of €421 million euros, compared to the losses recorded in the same period of the previous year – due to the beginning of the pandemic – totalling €409 million euros.

Among the positive aspects, as indicated by President Pablo Isla, is that traffic in stores has been increasing week on week, which translates into an increase in sales. It is also worth noting the strong growth in sales during the first quarter, despite the restrictions that still exist in stores and in some countries.

Despite these good results, Inditex has started the session lower by retreating from the upper band of the rising wedge, which the price has been following during the last months, currently acting as the main resistance level. This retracement has led the price to seek support at its first support level in the average of 18 blank sessions in the nearby support/resistance zone at the previous lows, marked with the red stripe on the chart.

It is important that we follow the evolution of the price during the next sessions and see if the price is able to maintain these support levels or not, since the loss of these could lead the price to look for the lower band of the formation, in the form of a wedge.

On the contrary, this retracement to its support levels could be interpreted as a move in search of new momentum to attack the current resistance zone within normal, given the overbought accumulated after overcoming its previous resistance zone.

Source: Inditex daily chart from Admirals MetaTrader 5 platform from February 3, 2020 to June 9, 2021. Held on June 9 at 11:20 CEST. Note: Past performance is not a reliable indicator of future results or future performance.

 

Evolution of the last 5 years:

  • 2020: -17.20%
  • 2019: 40.71%
  • 2018: -23.05%
  • 2017: -10.44%
  • 2016: 2.33%

 

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