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Edited Transcript of ITX.MC earnings conference call or presentation 12-Dec-18 8:00am GMT

Q3 2018 Industria de Diseno Textil SA Earnings Presentation

La Coruna Jan 11, 2019 (Thomson StreetEvents) -- Edited Transcript of Industria de Diseno Textil SA earnings conference call or presentation Wednesday, December 12, 2018 at 8:00:00am GMT

TEXT version of Transcript

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Corporate Participants

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* Ignacio Izuzquiza Fernández

Industria de Diseño Textil, S.A. - CFO

* Marcos López García

Industria de Diseño Textil, S.A. - Capital Markets Director

* Pablo Isla Álvarez de Tejera

Industria de Diseño Textil, S.A. - Executive Chairman & CEO

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Conference Call Participants

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* Anne Critchlow

Societe Generale Cross Asset Research - Equity Analyst

* Chiara Battistini

JP Morgan Chase & Co, Research Division - Co-Lead, European General Retail

* Michelle Wilson

Joh. Berenberg, Gossler & Co. KG, Research Division - Analyst

* Rebecca Anne McClellan

Grupo Santander, Research Division - Equity Analyst

* Simon William George Irwin

Crédit Suisse AG, Research Division - Director

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Presentation

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Operator [1]

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Good morning, ladies and gentlemen. Welcome to the presentation of Inditex's Results for the Interim 9 Months 2018. The presentation will be chaired by Mr. Pablo Isla, Chairman and CEO. This presentation will be followed by a Q&A session comprising 2 parts. We'll start with the questions received on the telephone, followed by those received through the webcast platform.

Mr. Isla, you have the floor.

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Pablo Isla Álvarez de Tejera, Industria de Diseño Textil, S.A. - Executive Chairman & CEO [2]

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Good morning to all the participants in this webcast conference call regarding Inditex's results for the interim 9 months 2018. I am Pablo Isla, and here with me today are Ignacio Fernández, our CFO; and Marcos López, Capital Markets Director.

I would like to start the presentation telling you that the interim 9 months of 2018 has been a period of strong execution for Inditex globally. We operate a unique global sales platform that fully integrates stores and online, and offers huge growth potential. Our business model combines stores and digital seamlessly, and we are ready for the opportunities that this brings with current and new customers.

Inditex' performance in the period has been strong. Sales in local currencies have increased 7%. We have achieved positive like-for-like sales growth in all geographical areas over the period. Our operations have also shown high efficiency and tight control. This is reflected in a strong gross margin performance.

We have opened the stores in 51 different markets, demonstrating the reach of Inditex' business model. We have also continued our global online rollout. We have a worldwide presence and have further diversified our operations over the period. We continue to see significant growth opportunities for Inditex globally.

We have reinforced the differentiation of our key global flagships with very visible stores. Starting with Paris, I would like to highlight the new location of our Zara store in [Boulevard,] Haussmann to a new site. The new global flagship at 54 Boulevard, Haussmann comprises 3,000 square meters and will open tomorrow.

Massimo Dutti has also opened a very impressive flagship in Lisbon at Avenida da Liberdade. Bershka recently opened a new flagship in Budapest. Pull&Bear has fully refurbished its flagship in Berlin, introducing its latest image. Stradivarius launched the [print] collection that has been very well-received. Zara Home has introduced the sustainable collection, Join Life. Following on the success of its athletic lines, Oysho has launched a ski collection. Uterqüe has introduced their recent collection for the festivities.

Let me now hand over to Ignacio, who will present some of the key aspects of our financial performance, and I will join you later for the outlook section.

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Ignacio Izuzquiza Fernández, Industria de Diseño Textil, S.A. - CFO [3]

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Thank you. In the interim 9 months of 2018, Inditex has had a good operating performance. This is reflected in the strong gross margin. As a result, Inditex has maintained the EBIT margin despite a minus 4.3% currency impact on sales.

Net sales reached EUR 18.4 billion; EBIT, EUR 3.1 billion; and net income, EUR 2.4 billion. We have achieved strong growth in local currencies in sales, gross profit and EBIT, as you can see in the right-hand side column of the chart.

Starting with sales, I would like to tell you that in the interim 9 months 2018, sales in local currencies grew 7%. Like-for-like sales growth has been satisfactory. The currency impact has been minus 4.3% in the 9 months 2018 and minus 3.2% in the third quarter.

I would like to comment briefly on the evolution of Inditex over the second half of 2018. The execution of our mall in the period has been satisfactory. Like-for-like in second half '18 to the end of November grew plus 3%, following a good start to the season, an extraordinary warm September and plus 5% like-for-like in October and November. Let me add that Inditex decided not to participate in the promotional activity [for that we're seeing in the sectors since] September. This high operational efficiency is reflected in the third quarter gross margin.

Inditex maintains its guidance for the second half 2018, like-for-likes and gross margins.

Given the strong execution of the business model, the gross margin has grown 56 basis points to 58%. Gross profit has increased 4% to EUR 10.7 billion. We have sustained our [commercial] policies over the period.

Operating expenses are tightly under control. They have grown 4%, reflecting the growth in sales and included all the start-up costs. Operating and working capital remains negative as a result of the business model.

The working capital evolution is in line with the performance of the business, with very tight control of current accounts, specifically our inventory position, which is up just 3%. Let me also highlight the strong cash generation of the group.

I will now hand over to Marcos, who will elaborate on the performance of the company.

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Marcos López García, Industria de Diseño Textil, S.A. - Capital Markets Director [4]

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Over the interim 9 months, we have continued with our global expansion. We have opened stores in 51 markets so far this year. Global online launches continue at a very rapid pace.

Regarding the performance by concept in the interim 9 months 2018, Zara continues to represent approximately 2/3 of group sales, the younger concepts around 1/3.

The younger concepts grouped together have performed satisfactorily. I would like to highlight that Stradivarius and Pull&Bear have performed strongly.

I will now hand over to Pablo for the outlook section.

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Pablo Isla Álvarez de Tejera, Industria de Diseño Textil, S.A. - Executive Chairman & CEO [5]

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Thank you. Ordinary capital expenditure for 2018 will be around EUR 1.5 billion. For the coming years, we'll continue to see strong growth opportunities, with capital expenditure growing below space growth.

Regarding the outlook, I would like to add that Inditex maintains its guidance for the second half 2018 like-for-likes and gross margins. Just as a reminder, we also made our final 2017 dividend payment of EUR 1.2 billion on the 2nd of November.

We will continue to invest in the expansion of our business across a number of markets, all of which offer attractive long-term returns through our sales platform that fully integrates stores and online. Inditex is present on 5 continents and in all key markets, demonstrating the group's global reach. The current base offers huge growth potential for the coming years.

Inditex online operations continue to see very rapid growth. Our business model allows a strong development of our online sales with same-day delivery in metropolises and next day as global standard.

In parallel with the total integration of inventory and full implementation of RFID, all Inditex concepts will offer online sales in any market in the world by 2020. We want to make our fashion collections available to all our customers wherever they are.

In November, Inditex launched online sales for Zara in an additional 106 markets. Zara collections are now available in a total of 202 markets.

We are in a unique position as we enjoy a global platform that fully integrates stores and online as the best way to respond to the demands of our customers. We'll continue developing new initiatives in a fully integrated way as Zara's recent animal print collection, '70s Show Collection, the Dress Time collection, the Traveler Collection and the sustainable collection, Join Life, now available in all our concepts.

Before closing, I would like to highlight some selected Zara store openings and enlargements from recent months.

We'll continue to reinforce significantly the differentiation of our key global flagships with [very visible stores] . I would like to begin with the store that Zara opened last month in Milanofiori. Zara also refurbished recently its flagship in Malta. We also opened recently at King of Prussia in Philadelphia.

In Shanghai, we have opened a flagship store of 3,200 square meters at MixC World. In Japan, we have relocated and enlarged our flagship at Roppongi Hills in Tokyo. Zara also opened at CentralWorld in Bangkok. We have opened a flagship in Indonesia at Jakarta's Senayan City. We will release our full year 2018 results on the 13th of March 2019, and this is all from us.

We will be pleased to answer any questions you may have.

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Questions and Answers

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Operator [1]

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(Operator Instructions) The first question comes from Anne Critchlow from Societe Generale.

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Anne Critchlow, Societe Generale Cross Asset Research - Equity Analyst [2]

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My question is about the guidance. There were 2 main components to that, including like-for-like of 4% to 6% in the second half. I'm just wondering whether there might be a bit of flexibility between the like-for-likes and the gross margin, in other words, we might see weaker like-for-like and better gross margin within the guidance in the second half.

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Pablo Isla Álvarez de Tejera, Industria de Diseño Textil, S.A. - Executive Chairman & CEO [3]

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Well, Anne, I think that's what we have mentioned clearly in the presentation is that we have opted very clearly for quality over this third quarter, and you can see the results. And after the 3% like-for-like we have obtained in the third quarter to the end of November and with 5% like-for-likes in October and November, we prefer to just to maintain the guidance as we believe this is feasible. And in terms of gross margin, you see the execution has been very, very clear. We have decided to avoid all the promotional activities seen widely in the sector and focus very much on the execution, and this is reflected in our very strong gross margin performance. And this is why we sustain the like-for-like and gross margin guidance for the second half of 2018.

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Anne Critchlow, Societe Generale Cross Asset Research - Equity Analyst [4]

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Okay. It would seem that you need about 7% like-for-like in the fourth quarter to make the guidance. Are you comfortable with that?

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Pablo Isla Álvarez de Tejera, Industria de Diseño Textil, S.A. - Executive Chairman & CEO [5]

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We prefer not to enter specific periods of time. I think that we've had 3% like-for-like performance, as we have mentioned, because we decided not to enter into this promotional activity. The guidance remains what it is, 4% to -- 4% to 6% for the second half of the year.

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Operator [6]

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The next question comes from Simon Irwin from Crédit Suisse. The next question comes from Rebecca McClellan from Santander.

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Rebecca Anne McClellan, Grupo Santander, Research Division - Equity Analyst [7]

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Yes, can you hear me?

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Pablo Isla Álvarez de Tejera, Industria de Diseño Textil, S.A. - Executive Chairman & CEO [8]

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Of course.

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Rebecca Anne McClellan, Grupo Santander, Research Division - Equity Analyst [9]

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Yes, just one question. How -- do you think that your resistance to -- or you're not participating in the promotional activity in the market has [in fact bended] in any way your like-for-like performance over the period?

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Pablo Isla Álvarez de Tejera, Industria de Diseño Textil, S.A. - Executive Chairman & CEO [10]

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Well, Rebecca, what we can tell you is it is what we were saying during the presentation that this season has been a little bit volatile, as you can see. And we have now in the presentation, we have shown what are the public data in the month of September in the very relevant countries. Overall, what we can say is that, in the 4 months period, our like-for-like sales growth is 3%, which we think is very, very healthy. And what we were stressing was the fact we believe we were very much in our business model, we believe very much in our collections. You can see that the inventory position at the end of the quarter is only growing 3%, very, very healthy gross margin in the quarter. So we have preferred to keep what we think is the best way to run our business, not to enter into a very significant promotional activity that has been widely seen in the sector. Then, to elaborate, what would have happened in the opposite way. I mean, we can guess or we can try to elaborate whatever. But I think the reality is that our sales are very, very healthy. Our like-for-like sales growth in the 4 months is plus 3%. If we have in mind the quarter, we'll have very strong gross margin for the quarter. Having in mind that without currency impact, the gross margin would be even above what we are presenting because this is, of course, the gross margin with more than 3 negative points on sales coming from currencies. We think it is the right approach. We believe very much in our business model, in the execution of our business model, in the quality of our products, running the business with tight inventories, and this has been the strategy of the company in quite a volatile period during the last few months because of different external factors.

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Rebecca Anne McClellan, Grupo Santander, Research Division - Equity Analyst [11]

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Okay. And can I just follow-up then? In terms of the sort of second half guidance, which I get you're reiterating, are we going to get a slight shift back from the like-for-like and the gross margin because of Black Friday and the impact that has had in sort of recent weeks? Or should we see a similar sort of trend in terms of focus on full-priced sales and not just giving [away to promotional] activity and such?

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Pablo Isla Álvarez de Tejera, Industria de Diseño Textil, S.A. - Executive Chairman & CEO [12]

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Well, what we are saying and as Marcos was explaining just before and we were saying during the presentation in the note is that we maintain our guidance for the second half 2018 in like-for-likes and gross margins. Then to try to find the last impact of the last element, this could be endless. But we think that, globally, we believe that we can maintain our guidance for the second half 2018 that we anticipated to you in the month of September.

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Operator [13]

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(Operator Instructions) The next question comes from Frederick (inaudible) from Mainfirst.

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Unidentified Analyst, [14]

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I would be interested in the follow-up on the promotional environment changes. While the sales are more aggressive, where did you see this intensity in the promotional environment? And maybe you could help us giving us some color on fast-growing markets versus more mature markets, what was the behavior at the different regions?

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Ignacio Izuzquiza Fernández, Industria de Diseño Textil, S.A. - CFO [15]

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Thank you, Frederick. I think that, in the presentation, we have included a chart with some of the main retail indices, and you see that the key factors in September were weather-related, and this resulted in a wide, wide promotion in [as opposed to anywhere] else. I would prefer not enter into any geography. I would prefer to focus on what we have done. And the execution of the business model has remained very, very healthy. We have decided not to participate into this type of environment and execute according to the business model. And this is reflected in our numbers, also reflected in the way we have managed the gross margin, in the tight inventory position, growing just 3% is also shown in the cash generation of the company. And I think that the main message from us is that we have stuck to our fundamentals and on the execution with discipline in this type of environment, at least in the regular view of Inditex.

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Pablo Isla Álvarez de Tejera, Industria de Diseño Textil, S.A. - Executive Chairman & CEO [16]

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Yes, and we were mentioning during -- if we take a little bit longer view, because you know that we always like to think about not the last 2 weeks, but having a longer view. If we take a longer view, I think it's quite, quite relevant to remark the fact that, in the 9-month period, we have a minus 4% currency impact. And even with that, we have maintained our EBIT margin. So I think this is something extremely remarkable, and it shows the healthy way in which we are managing our business.

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Unidentified Analyst, [17]

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Just without going into details between regions, between some of the mature markets, the European region globally and your fast-growing markets, which account for, let's say, something like 40% of your mix, can you -- did you still see sustained growth in your fast-growing markets?

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Pablo Isla Álvarez de Tejera, Industria de Diseño Textil, S.A. - Executive Chairman & CEO [18]

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Did we see, sorry?

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Unidentified Analyst, [19]

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If we consider like fast-growing markets or so-called emerging markets with China in particular, my question was related to the fast-growing geographies and less mature markets, did you still enjoy the same kind of [more] verticals that you've had in the past?

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Pablo Isla Álvarez de Tejera, Industria de Diseño Textil, S.A. - Executive Chairman & CEO [20]

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Well, what we are saying in the presentation that we have positive like-for-likes in all the geographies in the 9-month period. So that is why I would prefer not to enter into this or that particular market in a short period of time, you must have in mind. And the way our approach to the markets or the way we think internally is never emerging markets, not emerging markets, fast-growing markets. We believe that we have growth potential in all the different markets. And as we have said during the formal presentation, even Spain, the market in which we are present since 40 years ago, we are constantly, year and after year, having positive like-for-like sales growth. So that is why, internally, we don't see our markets lag. These are -- this type of markets, we see growth potential in all the markets. For us, it's very important the idea of balanced growth all across the different markets. And we were saying that, in this 9-month period, we are having positive like-for-likes in all the geographies. We had the same -- I'll come back to what I was saying before. I think it's something also quite remarkable to have these positive like-for-likes in all the geographies. It's very consistent, very consistent execution of our business model. And if we'll come back to these last few months in, I would say, very volatile and challenging environment, we have been able to achieve positive like-for-like, 3% in the 4-month period, so nearly, in this 4-month period, very close to our guidance for the second half, 3% like-for-like with very strong gross margin. And at the end of the quarter, with nearly 0 inventory growth and very strong cash flow generation. Our net cash position is increasing 10% at the end of the third quarter. So, everything combined, we believe it's a very healthy way of running our business. And always having in mind the short-term, having also at the same time in mind the medium- and the long-term approach and always based on the quality of our products, on the execution of our business model, running always with little inventories, the fashion, the ability to react during the season, and this is what we'll continue to focus on. And then, currently, of course, with this fully integrated approach we do in stores on online, which, as you know, is an essential part of our strategy, our approach in all the different markets. And we believe very much in this approach, much more than to say if in the last month, 3 weeks, 2 weeks, there has been this or that, that could have impacted sales. So if you analyze our performance in terms of like-for-likes or if you have in mind as we are publishing our performance without the currency impact in the 9-month period, you can see it is very healthy evolution of the business and the way we operate our business. And now, particularly, this remarkable fact that we are being able, with a significant negative currency impact, to maintain our margins, which I think the EBIT margin -- we have been able to maintain the EBIT margin, which we consider is something that shows the healthy execution of our business model over this year.

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Operator [21]

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The next question comes from Chiara Battistini from JPMorgan.

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Chiara Battistini, JP Morgan Chase & Co, Research Division - Co-Lead, European General Retail [22]

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I had a follow-up question on your like-for-like comment as well. As I'm hearing a few different numbers as implied for Q3 in The Street, would you be able -- I know that you don't comment on a quarterly basis on like-for-like, but would you be able to confirm whether the like-for-like was around 2%, 3% in the quarter 3? And on your comment on like-for-like on October, November at around 5%, is that for October and November, combined? Or should we assume that October and November were broadly at the same levels of mid-single digit, please?

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Ignacio Izuzquiza Fernández, Industria de Diseño Textil, S.A. - CFO [23]

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Chiara, I think that we have been very, very clear in the sense that we've mentioned that like-for-like for the third quarter to the end of November is plus 3%, which is absolutely remarkable in the sector. I think we have given you a profile. We started this season well with very strong collections. We had an extraordinary warm September that is very well-documented in all the different statistics in the majority of the countries in which we operate. And then you have plus 5% like-for-like in October, November. I think that we wanted to profile this performance because it was a bit unusual. We also wanted to give you the gross margin performance because I think the most relevant factor is very clear. We said that we decided not to participate in the sector-wide promotional activity and stick very much to the business model. This has resulted in a positive 108 basis points gross margin and very clear, very neat inventory at the end of the quarter and very strong cash generation. And I think this reflects very much the performance more than what is the like-for-like in any given month, and this is what we would like to say.

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Operator [24]

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The next question comes from Simon Irwin from Crédit Suisse.

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Simon William George Irwin, Crédit Suisse AG, Research Division - Director [25]

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Sorry for missing the earlier question. Can I just ask about OpEx leverage? Obviously, there's been a bit of OpEx leverage through most quarters this year. Can you talk about in the medium term as to whether you would expect to be deleveraging your OpEx like this or there are kind of one-off elements to it this year that won't continue in future years?

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Pablo Isla Álvarez de Tejera, Industria de Diseño Textil, S.A. - Executive Chairman & CEO [26]

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Well, what I would say is that, as we were saying during the presentation, I think the profit and loss account of the 9-month period or even of the quarter, if we consider the quarter, shows very tight cost control all over the company. We are able to keep costs under control. You must have in mind that when there is a [soft] significant currency impact, as we have had in these 9-month period, it's much more difficult to analyze what is going on regarding OpEx leverage. If you would have in mind the profit and loss account in constant currencies, you would see this type of leverage. I think, globally, what I can say, overall, what I can say is that OpEx growth and OpEx leverage will have a lot to do with like-for-like sales growth if we think about the medium and the long term. It will be very much dependent on like-for-like sales growth. If you ask me, do you consider that there is a possibility of OpEx leverage in the coming years, of course, the answer is always, yes, because we think that we are going to be able to continue having healthy like-for-likes over the coming years. But the main element from that point of view is going to be, as always, like-for-like sales growth, and then this combination between gross margin, OpEx growth, EBIT growth, so there is no reason why we could not think about OpEx leverage in the coming years. But as I was saying to you, it has much more to do with the like-for-like sales growth evolution than with anything else. And when there is a strong or significant currency impact, then sometimes it's very difficult to analyze. If you have in mind that in the 9-month period, currency impact is 4%, then it's very difficult to analyze OpEx leverage because it depends very much on the currencies and on many different things. And so [Simon] that is why we think about medium and long term. In fact, in terms of currencies, what we can say is that at current exchange rates, there would not be any currency impact during the next year. So with current exchange rates, we would continue having some negative currency impact in the fourth quarter. But for the year 2019, there would not be any negative currency impact. So then if we think about OpEx in the year 2019 OpEx leverage, it will have a lot to do with like-for-like sales growth during the year.

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Simon William George Irwin, Crédit Suisse AG, Research Division - Director [27]

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Okay. Could I just ask a quick follow-up on gross margin? Because you said you obviously decided not to take part in widespread promos across the market. Now, obviously, in 4Q last year, you had a very significant markdown 100 -- minus 138 basis points. So if you're not taking part in widespread promotion this year, does that all come back on? Or you effectively smooth that gross margin through the whole of second half?

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Pablo Isla Álvarez de Tejera, Industria de Diseño Textil, S.A. - Executive Chairman & CEO [28]

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Well, but you know, we prefer at this stage to say that we maintain our guidance for like-for-like and gross margin growth during the second half. You know that we prefer not to elaborate very much. This or that could be 20, 25, 30 basis points above or not. So we think that the right approach, about what our guidance for the second half at this stage is to maintain our guidance as we anticipated to you in the month of September. If you ask me, at our view, let us say this way, satisfied with the evolution of the gross margin in the third quarter, the answer is, of course, yes, we are satisfied with the evolution of the gross margin performance during the third quarter. And we think we have taken the right decision, thinking not only about the short term, but thinking also about the medium and the long term. And we were believing very much in the quality of our collections, in our business model, the execution of the business model, so then that is the reason why we decided not to participate in these huge promotions that were taking place in the market at that stage and to keep with our business model and focusing on the quality of our collections and focusing on these new deliveries with new products and so on.

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Operator [29]

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The next question comes from Michelle Wilson from Berenberg.

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Michelle Wilson, Joh. Berenberg, Gossler & Co. KG, Research Division - Analyst [30]

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I just had a question on like-for-likes and the profit contribution coming from those like-for-likes. I think you've previously kind of steered towards 3% like-for-like resulting in operating leverage. I guess, it's kind of following on from the previous question. How would that profit contribution compare between a store like-for-like and an online like-for-like?

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Pablo Isla Álvarez de Tejera, Industria de Diseño Textil, S.A. - Executive Chairman & CEO [31]

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Not very similar. What we always say is that online business is not dilutive, and of course, this continues being the case, and this continues being the statement of the company. So online business is not dilutive in terms of margins. So when you analyze, of course, we will update you about our online business in the full year results, as we did last year. But when you analyze the global evolution of like-for-likes during any particular period, in terms of profitability, in terms of margins, there isn't any significant difference between store like-for-likes and online like-for-likes. We will -- it's not dilutive, and it continues being the case.

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Operator [32]

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The next question comes from Anne Critchlow from Societe Generale.

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Anne Critchlow, Societe Generale Cross Asset Research - Equity Analyst [33]

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Please, could we have an update on the large logistics facility that you were planning to open in The Netherlands? Where are you with that?

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Pablo Isla Álvarez de Tejera, Industria de Diseño Textil, S.A. - Executive Chairman & CEO [34]

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Well, we are finishing the construction. It will begin to operate in the month of May next year. And we are in the final stage of the construction of this logistic platform, and it will be the -- you know it's for Zara, for the Zara brand. Currently, we have 3 big logistic platforms, one here in Barcelona, the one in Madrid, the one in Zaragoza, and this is going to be the fourth one. And as I was saying to you, it will begin its operations next May. So that is the plan that we have in mind, and the construction is nearly finished.

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Anne Critchlow, Societe Generale Cross Asset Research - Equity Analyst [35]

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And which markets will it serve?

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Pablo Isla Álvarez de Tejera, Industria de Diseño Textil, S.A. - Executive Chairman & CEO [36]

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No, it is not a question of markets because you know that, for us, it's very relevant and for our business model the idea of the centralized inventory position. So it will be -- in fact, we have not -- the 3 logistic platforms that we have today, the split is much more sections. So we have the women's section in Zaragoza, mainly, the men's section here in Barcelona, the children's section in Madrid. So then depending on the growth of the sections, certain elements of the different sections will move to the new logistic platform, but not markets because our approach, for us, is very important, this idea of the centralized inventory position.

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Operator [37]

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We are now finishing with the telephone Q&A session to address the questions received through the webcast platform. Thank you.

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Marcos López García, Industria de Diseño Textil, S.A. - Capital Markets Director [38]

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Thank you. We have 2 main areas covered by webcast questions. Perhaps, Pablo, you could give us an update on the RFID implementation.

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Pablo Isla Álvarez de Tejera, Industria de Diseño Textil, S.A. - Executive Chairman & CEO [39]

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Well, yes, what we can say is that, as you know, we have rolled out in all Zara stores. Now we are with the different brands, Massimo Dutti, Uterqüe, Pull&Bear, Oysho; in 2019, Stradivarius, Zara Home. Our idea is to have fully rolled out across all concepts by 2020. We think it's a very important project. We think it's a project, which is also today very, very related with this idea of stock integration, which is something extremely relevant for us. Now, at this stage of the year, we have currently rolled out full integration in all markets for Zara where we have stores and online. This is something very important, as you know, in terms of managing the stocks. And our idea is that for -- by 2020, we will have a full integration between store and online stockroom in all the different concepts across all the different countries in which we have a store and online presence. So both projects are very important, are related between them, and we are totally on track in terms of what we plan as they roll out, and we think it's something very positive for the business, very positive for customer service and also very positive for us in terms of the way we manage our stock. So it's a clear advantage, this idea of stock integration.

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Marcos López García, Industria de Diseño Textil, S.A. - Capital Markets Director [40]

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That basically concludes the webcast questions. You've covered 2 main areas of RFID and stock integration, that's it for webcast questions.

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Pablo Isla Álvarez de Tejera, Industria de Diseño Textil, S.A. - Executive Chairman & CEO [41]

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Well, thank you very much to all of you. And of course, if you have additional questions to our Capital Markets Department, we will be ready to answer them. Thank you very much.

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Operator [42]

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Ladies and gentlemen, this now concludes our conference call. Thank you all for attending. You may now disconnect your lines.