Inditex Stock

[Foreign Language] Good morning. Welcome to everyone taking part in our half-year 2026 results presentation today. My name is James O'Shaughnessy, Investor Relations. This presentation will be hosted by Inditex's Chief Executive, Oscar Garcia Maceiras; our CFO, Andrés Sánchez; and the Director of Investor Relations, Gorka García-Tapia.

As per usual, after the presentation, we will commence a Q&A session, starting with the questions received over the phone, followed by those questions received on the webcast platform. We'll take the disclaimer as read.

Oscar, please.

Good morning, and welcome to our first half 2026 results presentation. Thank you for joining us today. I am pleased to announce that during this last semester, we have generated a solid financial and operating performance with strong sales, all the while maintaining a strong level of profitability. The strength and resilience of our unique business model was evident. And despite a period with geopolitical uncertainty, our teams came together to deliver broad-based performance across geographies, concepts and channels.

Our Spring/Summer collections have been very well received by customers. Sales grew 7.6%. Sales in constant currency increased by 9.2%. It's evident that the execution of the business model over the first half period has been very good despite some of the headwinds we highlighted in the first quarter. This has flowed through to the bottom line with net income increasing 6.8% to EUR 3 billion. This strong performance has spilled into the second half, as you can see from the trading update we have provided you. Store & Online sales in constant currency between the 1st of August and the 7th of September grew 9%.

Today, I would like to refer to the framework we used to think about what makes Inditex distinctive and the opportunities that our model continues to create. At the heart of our model is product, and behind the product are our people and their ability to offer our customers what they are looking for. We identify trends through our feedback loop, channeling crucial data to our commercial teams. Amongst these teams, today, we boast more than 700 fashion designers whose aim is to generate products that adhere to the very latest fashion trends.

To give you an idea of the scale of the business, we operate a global platform across 8 concepts with stores in 98 different markets all around the world, 99 from tomorrow with our first opening in Curaçao as well as 215 markets online. These channels are fully integrated and mutually reinforcing. For example, around 60% of online returns are made through our stores and around 20% of online orders are collected in store, too. This integration is not only about convenience. It gives our teams a more complete view of demand and inventory and helps us provide a consistent customer experience across channels. Of course, none of this would be possible without a broad and flexible global supply chain.

The ability to diversify production across more than 50 markets has never been more relevant in recent times. A further distinctive capability is what we call operational proximity. By this, we mean the way we work with our supplier network, focusing on agility, flexibility and responsiveness and integrating these long-term relationships into our operating model rather than simply where production is located. The partnership Inditex has with its suppliers extends more than 8 years in over 70% of production, making Inditex's relationship with suppliers quite unique.

This way of working is underpinned by our logistics and inventory network. It's supported by multimodal transport and our 16 primary logistics centers, which operate as part of a single inventory position. This allows us to allocate product efficiently across different markets to support product availability and to maximize full price sales, whether in stores or online.

Of great relevance over the years has been the financial strength enjoyed by Inditex, particularly during volatile times. Indeed, the net cash position of over EUR 10 billion on the balance sheet underwrites the financial stability of the business and secures the future investment pipeline needed to generate strong future growth across the cycle.

Over the last decade, we have reinvested on average anywhere around 5% or 6% of sales in the business while maintaining a strong financial discipline and attractive total shareholder returns. People often talk about the different elements that come together to produce the competitive advantage enjoyed by Inditex. But there is one aspect that tends to be overlooked by the wider market, our strong corporate culture.

Our unique DNA fosters a drive to always do better in the face of a constantly changing environment and to always search for new ways to do things. Ambition and innovation are at the center of everything we do. The many factors that I mentioned just now in combination make Inditex the company that we see today. Taken as a whole, this is a very powerful combination, making the model distinctive, resilient and difficult to replicate. And of course, all this enables multiple avenues for long-term growth.

Despite the very respectable and consistent rates of growth we have achieved over the years, both in terms of sales and our presence in ever more markets, at a global level, we command a mere 2% market share, offering plenty of space for growth well off into the future. Let's not forget that this market share is across all 8 concepts at Inditex.

While Zara remains very much an engine for growth for the overall business, we have seen a remarkable level of growth coming from the younger concepts in recent years. Despite currently having at group level a physical store presence in a total of 98 markets, the non-Zara concepts have limited commercial presence in 59 markets in which at least one of non-Zara concept has less than EUR 50 million in annual sales. That should give you an idea of where we think it's going.

The common thread through all these years of growth, as many of you will be familiar with, is our overall strategy of retail optimization. This strategy is to continually enhance the customer experience at every level. Over the last 3 years, we have delivered 5% compound annual growth in gross space. Once again, as I mentioned earlier, the physical store experience and the online experience go very much hand-in-hand, which explains how on average, our online sales since 2019 have grown by more than 18% per year.

Our confidence in the future springs not only from what we see as our unique business model, but also comes from the ability of our teams to constantly innovate and challenge the status quo. This ability to see things differently is best illustrated in recent customer experience project, both in store and online, such as Zara Man stand-alone stores, our footwear showrooms in Zara, Massimo Dutti, BSK MMBRS, Oysho Community or the launch of Zara Try-on, amongst many others. All this drives the very significant long-term growth opportunities we see today.

And now, I will pass you over to Andrés, who will go over numbers.

Thanks, Oscar. As you can see from the table in front of you, Inditex's results in the first half of 2026 have been solid. The strong execution is clear when we look at the P&L. The sales performance demonstrates that despite the disruptions we've seen in headlines since the end of February, our teams have been successfully reacting to the fashion trends. This has resulted in a very respectable gross margin performance with EBITDA growing strongly whilst maintaining a broadly stable margin flowing nicely down into PBT and the net income line.

At the top line, we can see that sales grew 7.6% to reach EUR 19.8 billion. In constant currency, that translates to 9.2%. This strong performance was very much across concepts, store and online channels. At current exchange rates, we continue to expect a minus 1% top line currency impact for the full year 2026. We are now up to 215 markets in terms of our global online presence. Given the ongoing fragmented nature of the market as a whole and our low market share, we can confidently say that our strong long-term growth opportunities remain in place. One factor that I think is worth bringing out at this point is the level of global geographical diversification. This, of course, helps drive stability at the group level, particularly during times of regional uncertainty.

In constant currency, all geographical areas had a positive sales evolution. In the first half of 2026, gross profit increased 8.3% to reach EUR 11.6 billion. The gross margin reached 58.7%. This gross margin serves as a demonstration of the good execution of the business model over the period. Our teams have done really well despite the headwind of elevated transport and input costs we highlighted back in the first quarter resulting from disruptions in the Middle East.

Based on available data currently for the full year 2026, we continue to expect a stable gross margin of plus/minus 50 basis points. Operating expenses increased 8.3% in the first 6 months of 2026. The mild deleverage we are seeing was also driven by the increased costs just mentioned in the gross margin slide as flagged back in June. Despite this impact, both EBITDA and EBIT margins remained broadly stable over the first half.

So now going down the P&L, we naturally come to EBITDA, which, in this case, increased 7.8% to EUR 5.5 billion, of course, very much consistent with the healthy performance of the top line. This flowed down into profit before tax, which grew 6.8% to EUR 3.8 billion with a PBT margin of 19.5%. Net income grew 6.8% to EUR 3 billion. This all points to another season of strong commercial execution.

Operating working capital remains negative as a result of the business model. The evolution of operating working capital is very much in alignment with the performance of the business over the period. Inditex's inventory as of the 31st of July was 9% higher, in line with the sales evolution.

It is important to note the high quality of -- as you can see from this slide, we continue to generate very strong levels of cash flow. Funds from operations increased 11% to EUR 4.1 billion. Capital expenditure reached EUR 1.3 billion, reflecting investments in 2026 aimed at underpinning future growth. We continue to expect ordinary capital expenditure for 2026 to be around EUR 2.3 billion. In addition, close to EUR 200 million of extraordinary CapEx will be invested in upgrading and enhancing our corporate facilities across the company, further strengthening Inditex's position as an employer of choice.

I'll pass it over to Gorka now.

Thanks, Andrés, and good morning once again to everyone. The numbers we've released to the market this morning point to a continuation of the strong performance we all saw back in June. It's pleasing to see that our execution has remained consistent throughout despite wider market volatility, be it geopolitical or otherwise. The performance of our teams here at Inditex has really been excellent. And with the global rollout of the optimization program still very much in place, it's worth highlighting some of the younger concepts.

We can confidently say that 3 of the younger concepts at the half-year mark have generated sales well in excess of EUR 1 billion, so sizable companies in their own right. If we take a look at Bershka, for example, its CAGR in sales over 4 years from 2022 to the first half of 2026 has been 12%. For the likes of Stradivarius, that rate is 15%. So we're seeing very healthy and sustainable levels of sales growth across the board.

On the theme of diversification at Inditex as well as growth, we have seen retail optimization activities in 51 different markets all around the world. Each one of the concepts is clearly pushing ahead with their own growth plans, as you can see from the numbers of new markets they've been opening in recent years. And there's certainly more to come on that front.

With that, I'll pass you back to Oscar.

Thank you, Gorka. Our fashion proposition shows our strong commitment to creativity, thanks to our talented teams that focus every day on innovation and the adaptation to what our customers are looking for. Zara today occupies a more relevant place than ever in the world of fashion with a global cultural impact, having the opportunity to launch important collaborations with prominent artists in the space of fashion and music.

Regarding our stores, Zara has launched in new locations, for example, in Mexico, Los Cabos. Additionally, we have made some important enlargements, refurbishments and relocations in some of our most emblematic stores such as London Bond Street, Seoul Gangnam and Belgium Ostend. As our core engine, Zara's widespread presence serves as a powerful launch pad for our younger concepts to scale rapidly worldwide.

To give you some examples, last month, August, Bershka opened its first store in the U.S. in Aventura, Miami. This is one of the 2 planned openings for the concept in the Miami area in the immediate future. Also in August, Bershka launched its second store in Brazil, Rio Barra, after the opening in Morumbi, São Paulo in March. Stradivarius, another of the younger concepts, which have been doing particularly well, has recently launched its first store in Munich, Riem Arcaden. Massimo Dutti has also opened its first street-level store in Korea in Seoul Hannam, bringing together fashion, architecture and local culture within our store building.

Finally, in August, we opened our first Lefties store in the U.K. in Liverpool ONE, continuing our expansion into new markets after successfully launching our first store in France, Valvert, back in May. The new soft tag technology has now been -- is now being implemented in all of our stores. This program adds to the existing in-store technology ecosystem with Click & Collect silos, assisted checkouts and drop-off points and sorters.

As you can see in the video, one of the technologies we are rolling out across our stores is sorters. These automated sorting systems help to improve the experience for both our customers and our team members, connecting stock rooms, fitting areas and commercial space. We are using all this technology as a springboard for the further integration of the online platforms with our increasingly digitalized stores for the years to come.

Our online platforms continue implementing improvements in order to offer a unique experience to our customers. Personalization and the development of communities are 2 of the priority focus areas. In the half year, Inditex has actively engaged in a number of initiatives on the sustainability front that include new agreements that strengthen our partnerships with Conservation International and with the United Nations High Commissioner for Refugees, supporting projects for the protection and restoration of the Amazon Forest and for improving the conditions of Rohingya refugees in the camps of Cox's Bazar. Additionally, we have been supporting Red Cross in the recent earthquakes in Venezuela and Colombia.

And now, over to the outlook for this year. Inditex's potential for long-term growth is clearly still very much in place. We continue investing with the aim of enhancing our competitive differentiation while making sure we are in a position to take advantage of the extensive growth opportunities ahead. The growth of annual gross space in 2026 is expected to be around 5%. We also expect net space contribution to continue to be positive, along with ongoing strong online growth.

For 2026, we estimate ordinary capital expenditure of approximately EUR 2.3 billion. We continue to focus the ordinary capital expenditure on our global store base, the online platform and the rollout of technology programs that will enhance the level of integration.

A brief reminder on the dividend. The final dividend payment for 2025 of EUR 0.875 per share will be made on the 2nd of November 2026.

I'm going to end now with a comment on our current performance. Autumn/Winter collections are being very well received by our customers. Store and online sales in constant currency increased 9% between the 1st of August and the 7th of September 2026 versus the same period of 2025.

Many thanks for attending this results presentation today. That concludes our presentation. We are happy to answer any questions you may have.

[Operator Instructions] The first question comes from Sreedhar Mahamkali from UBS.

I guess the key one that we are all battling a little bit with OpEx growth faster than sales, as you mentioned in the release. It would be great to hear your thoughts, talk a little bit more about what's changing in the model? And is this a trend that we should expect for the second half of the year as well?

Thank you, Sreedhar. Thank you for your question. As we mentioned during the call, the main driver of our performance continues to be the ability of spot trends, offering our customers what, when and where they are looking for maximizing our full price sales. As we mentioned in Q1, disruptions in the Middle East resulted in higher transport costs and input costs during the first half of the year. And as you saw, it's the transport component that affected both gross margin and OpEx line. In OpEx, just to be more precise, we have costs related to online fulfillment and distribution to franchisees, while in COGS, we have the larger component of transport costs.

I'd like to take the opportunity also to highlight a few key points when thinking about the gross margin for this year. Considering the current situation and that there is a timing lag between the transportation and your impact on cost of goods sold, we expect this to impact gross margin in H2 as well. And the second, FX sourcing benefits from the weaker U.S. dollar was a slight tailwind in H1, as we commented. But this impact, while with current available data, is neutral in H2. In any case, the current environment is included within our gross margin guidance of plus/minus 50 basis points for the full year.

And a final remark regarding OpEx. I'd like to comment that we are very pleased with the execution of the business model. In this sense, let me point out that the underlying business expenses were tightly controlled. And as always, we continue to be focused on the long-term profitable growth of the group with a focus on broadly stable operating margins.

The next question comes from Richard Chamberlain from RBC.

I just got a question on space impact on sales, please, impact on sales from new space. How has that been trending through the first half? And what are your expectations on space contribution to sales for the second half and into next year, please?

Great. Thanks, Richard. I think with regards to space, a couple of points I can highlight. The first is you know we have -- we provided 3-year guidance of gross space growth, which ends in 2026. So with regards to the second part of your question, going forward, you'll have to wait until March for us to mention something with regards to that.

And with regards to space contribution, you have to consider that we're still very much on target for the 5% gross space. We'll have to see how that converts, but I don't think you should expect anything different to what you've been seeing in recent years.

The next question comes from Georgina Johanan from JPMorgan.

I just wondered if you could give an update on sales performance in the Middle East, please? And just some color on what you're seeing there given the backdrop.

Absolutely, Georgina. Thank you. I think the first point I'd mention is we have around 480 stores in the Middle East, and they're operating under a franchise model, as all of you know. And today, all of these stores are currently open. The geopolitical conditions are having an impact in sales in the Middle East region, although we have seen an improvement since the first quarter in that regard. I think it's important to mention that this is a very diverse region with different countries having different impacts. And as you've seen in the presentation, in any case, we've presented positive growth in constant currency in all regions. Thank you.

The next question comes from Matthew Clements from Barclays.

Significant investment into the new campus, how can you provide confidence to investors that it's an efficient use of capital? And can you provide confidence as well that the investment costs for that program won't run into 2027?

Thanks for the question, Matthew. Well, for fiscal year 2026, as we mentioned during the call, we expect ordinary CapEx to be around EUR 2.3 billion. And as previously mentioned, this investment will be mainly focused on our commercial presence, technological integration and efficiency of our processes. Capital allocation remains, for sure, focused on generating attractive returns over the long term through projects that enhance the business model and customer experience.

And to your point, as Andrés mentioned, close to EUR 200 million of extraordinary CapEx will be invested in upgrading and enhancing our corporate facilities across the company, further strengthening Inditex's position as employer of choice. An important part of this new extraordinary CapEx mentioned is related to our new campus in Barcelona, for Bershka, Oysho, Massimo Dutti and Lefties. And we are very excited for our teams. And as always, we will keep on investing in the future. Thank you.

The next question comes from Anne Critchlow from Berenberg.

I just wondered if you could talk about any future market launches you have planned for Lefties, please? And also, does Lefties operate on a lower gross or EBIT margin than, say, Zara?

Great. Thank you for the question. I think I'm aware that many of you have gone to the new store opening in Liverpool for Lefties. And I'm sure that you've all seen the Lefties' product proposition and especially the store technology that we have out there. Lefties' Liverpool store has, for example, all the technology that's being rolled out in Zara, including the sorters that you had a chance to see a video during today's presentation, assisted checkout, et cetera. I think Lefties is just one of our younger concepts of whom, as we've described today, all have very strong growth opportunities.

I think we've mentioned in previous calls, in 2025, Lefties launched in Italy. In 2026, Lefties entered France, and we are planning 2 new openings in the U.K. in Lakeside in London and in Newcastle. I'd also just point out that Lefties runs the same fully integrated business model that the rest of the concepts at the group follow.

The next question comes from Warwick Okines from BNP.

Just a question on the P&L in Q2, if you don't mind. Did you receive any tariff refunds in the quarter? And were franchise sales growth trends still lagging other sales growth like they were in Q1?

Thank you, Warwick. I will try to answer your first question regarding tariffs, and then, I will pass the floor to Gorka to complete the question. As we mentioned back in 2025, at the height of the tariff discussion, we commented that we had a limited impact at the group level from the higher tariffs in the U.S., thanks to our high level of geographical diversification in terms of sourcing, which, as you know, allows us to buy almost 50 different origins, making us flexible and adaptable, and of course, taking also into account our long experience dealing with different tariff regimes. In that sense, any potential impact from tariff refunds will be limited for the group. And then Gorka, if you can complete this...

Sure. So I think with regards to your question about the Middle East sales, I think I briefly touched on it previously. I think the sales in the region are still impacted, albeit it's somewhat of an improvement compared to what we were seeing in the first quarter. But as you can understand, the situation is quite sensitive in terms of what's going on in the market. And so we'll just have to see how that evolves going forward.

That completes the Q&A session. Let's move on to the webcast session. A number of questions here. The first of which is, Oscar, can you comment on how the group has managed the business operationally despite the impacts from the Middle East conflict, please?

Well, I guess, as we mentioned our view during the presentation, the excellent first half sales and margin performance were mainly driven by the effective execution of our fully integrated business model and the strong ability of our teams to respond quickly to customer demand. The priority of the group throughout has been to ensure uninterrupted product flow to our customers globally to maximize full price sales. And thanks to our ability to rapidly adapt transportation methods and sourcing flows and our operational proximity, we have successfully navigated the current environment driven by the conflict in the Middle East. The diversification of the sourcing model and the flexibility of our supply chain continue to be very important strengths for the group. And as you know, our business model relies on a central inventory position, which uses different transport modes.

Thank you, Oscar. The next question is, can you give us some color, please, on the strong August trading update?

Okay. We are very pleased with the strong evolution of sales at the start of the third quarter, which continues to reflect the good reception of our Autumn/Winter collections and the strong execution of the model across all channels and markets. The growth of plus 9% continues the trend of the first half where current constant currency growth was +9.2%. But as we always say, we believe it's important to put short trading periods into context. This is only 5 weeks at the beginning of fashion season. We should bear in mind that despite good results in online and physical store, we still have a low market share in most of our markets, and we keep on believing that growth is in our hands, not dependent on the performance of the broader market.

Thank you. Given that Bershka and Massimo Dutti have now entered the United States, what are your growth plans in the U.S., please?

Well, we keep on developing our strategy of selective growth in the U.S., like in the rest of the markets project by project. And Zara has been very active across new openings, enlargements and refurbishments in the past few years in the United States. Earlier, for instance, this year, we enlarged our stores in Miami Brickell and Tysons Corner, Virginia. And later this year, our flagship store in the Fifth Avenue will reopen after a total refurbishment.

We continue to plan new openings for the next years in new cities, leveraging the knowledge that we are gaining from our online performance. But as you mentioned, 2026 has also been an important year for the younger concepts. Bershka's first store in Miami Aventura opened in August, and Massimo Dutti will open its second store in SoHo, New York, next October. We are evaluating new additional opportunities not only for our -- the brands that have currently presence in the space, but also for the other concepts of the group. Thank you.

That concludes the webcast questions for today. Thank you.

Thank you to everyone for taking part in the presentation this morning. For those with additional questions, please get in touch with the Investor Relations department, and we will welcome you back in December for the 9 months 2026 results.

Good morning. We would like to extend a warm welcome to all those attending the presentation of Inditex's results for the first 3 months of financial year 2026. I'm James O'Shaughnessy, Investor Relations.

Going forward, the first quarter and the third quarter results presentations will place greater emphasis on the financial and operational performance of the business over the period. With this in mind, today's presentation will be hosted by our Chief Financial Officer, Andrés Sánchez, together with the Director of Investor Relations, Gorka García-Tapia. Oscar Garcia Maceiras, our CEO, will continue to provide a strategic update on Inditex at the half year and full year results presentations.

Once the presentation itself is complete, we will commence the usual Q&A session, starting with questions received over the phone, followed by those received via the webcast platform. Let's take the disclaimer as read.

Over to you, Andrés.

Good morning to you all, and thank you for attending our first quarter 2026 results presentation. Having now served as CFO for just over a year, it is a privilege to present these results to you today. As you may have seen from the financial press release posted earlier this morning, Inditex has generated a strong performance over this first quarter. This is particularly relevant given the wider macroeconomic and geopolitical uncertainty we have all been reading about in the newspapers in recent times.

For now, let me highlight that Inditex's strong financial results were not only driven by a robust commercial performance, but also importantly, by the strength and consistency of our operational execution. We'll comment on this further in a few moments, and I'm sure some of you will have questions on this.

Before I dive into the numbers in more detail, let's just cover some of the main features of the quarter. Firstly, Spring/Summer collections so far this season have been very well received by our customers. Sales over the period increased by 5.8% or by 8.8% in constant currency. This execution has translated into a strong gross margin performance, driven by the effective execution of our business model. At the same time, we have maintained a disciplined approach to cost management, enabling us to successfully contain costs across the business.

In terms of overall profitability, net income has increased by 5.4% to reach EUR 1.4 billion.

And now to current trading. The very satisfactory performance of the first quarter has continued going into the second quarter. Store and online sales in constant currency between the 1st of May and the 1st of June grew 11.5%, positively impacted by calendar effects. Let's take a few moments to provide some more color on the numbers themselves. The numbers on this slide, I think, illustrate very well the sound performance in the first 3 months of this financial year 2026. Sales over the period have grown by 5.8%. In the context of recent events, close management of the supply chain has been of paramount importance. This factor, as you can see, in conjunction with executing well, has led to a very robust performance in terms of gross margin. Likewise, operating expenses have been well managed over the period, and this has resulted in operating expenses growing by 6.4%, very much in line with sales performance of the business. EBITDA has increased 7.3% to reach EUR 2.6 billion.

Moving further down the P&L, I'm happy with the progress made at the net income level with an increase of 5.4% to reach EUR 1.4 billion. Net sales over the period reached EUR 8.7 billion, a growth rate of plus 5.8%. Sales growth in constant currency over the same period was plus 8.8%. In terms of sales for the full year 2026, we continue to expect a minus 1% currency impact.

And now over to gross profit, which increased 6.9% to reach EUR 5.4 billion. As mentioned a few moments ago, the main driver of this performance was the robust execution of the business model. With this in mind, the gross margin reached 61.2%, representing an increase of 67 basis points over the first quarter last year. You should take into consideration the FX sourcing benefit from the weaker U.S. dollar and a limited impact in the quarter from higher fuel prices due to the lag effect of transportation costs in COGS. In a wider context, I would say that we have exhibited a high level of flexibility and adaptability as reflected well in the results today. Based on current information, we would like to reiterate our gross margin guidance for the full year 2026 of plus/minus 50 basis points.

Passing over to operating expenses, we continue to be very vigilant regarding costs across the whole company, whether by department or by business line. In the period, operating expenses grew by 6.4%. As you would expect very broadly, cost growth tracked the evolution of sales. This cost efficiency contributed to the strong PBT margin of 20.1%.

Before I pass it over to Gorka, who will highlight some important aspects of this quarter, a few comments on working capital. The discipline and flexibility of our operating model continues to support a strong working capital profile and efficient inventory management across the group. Inditex's inventory as of the 30th of April 2026, was 1% higher. This closing inventory is considered to be of high quality.

And now a few comments from Gorka.

Thank you, Andrés. I think the results today speak for themselves. They represent a very strong set of numbers, which are underpinned by the healthy execution of our business model across the group. This performance is even more noteworthy when considered against the backdrop of the wider macroeconomic and geopolitical challenges seen in recent months. These conditions have had an impact on the sales of the Middle East region. However, the group has continued to deliver overall sales growth at a global level, reflecting the strength of our collections and the broad diversification of our business.

We have once again demonstrated a remarkable degree of adaptability, not only in terms of disciplined cost control, but also through the flexibility and resilience of our operating model. Thanks to the diversification of our supply chain and our demonstrated ability to rapidly adapt transportation methods whether through air freight, sea freight, land transportation or a combination of each of these, we've ensured an uninterrupted supply of high-fashion products to all our stores globally.

From a longer-term strategic perspective, our ongoing retail optimization strategy, which focuses on important new openings, enlargements and the refurbishments of stores in the best global location remains very much the focus of our efforts. We are expanding all of our concepts into new cities and new territories, while at the same time, launching new services aimed at enhancing the customer shopping experience. Currently, we have operations in 215 markets, with a relatively low market share in each of these. And let's not forget the highly fragmented nature of almost all of these markets. All this offers us substantial future growth opportunities. With this in mind, retail optimization activities, refurbs, relocations, new openings and absorptions, have conducted in 44 markets over the period. All concepts, including Zara, continue to deliver exciting new openings in key locations around the world.

I'll now hand it back to Andrés.

Thanks, Gorka. As has always been the case at Inditex, our strategy looks very much to the long term. Investments made aim to scale our capabilities to drive ongoing efficiencies and ultimately, to enhance our competitive proposition. The growth of annual gross space in 2026 is expected to be around 5%. Over the same time period, Inditex expects space contribution to sales to be positive, in conjunction with a strong evolution of online sales. For 2026, we estimate ordinary capital expenditure of approximately EUR 2.3 billion. 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.

As already announced, for the financial year 2026, the Board of Directors will propose at the Annual General Meeting, a dividend of EUR 1.75 per share. The dividend will be made up of 2 equal payments. On the 4th of May 2026, Inditex made a payment of EUR 0.875 per share, the remainder, EUR 0.875 per share, will be payable on the 2nd of November 2026.

I would like to finish with a comment on our current performance. Spring/Summer collections continue to be very well received by our customers. Store and online sales in constant currency increased by 11.5% between the 1st of May and the 1st of June 2026 versus the same period in 2025.

Thank you all for attending our results presentation this morning. That concludes the event for today. We will be happy to answer any of your questions.

[Operator Instructions] The first question goes to Sreedhar Mahamkali from UBS.

Andrés, can I just pick up the comments you made? I think you talked about gross margin, the shape of FX sourcing benefit and limited impact from freight in Q1? Any thoughts at all on how we should think about those aspects in the rest of the quarters, please? I realize you reiterated the guidance. Any help in terms of the shape, that will be incredibly helpful.

Thank you for your question. I would say that a strong start to the year and the gross margin performance were mainly driven by the effective execution of our fully integrated business model. It is important also to highlight the ability of our teams to respond quickly to customer demand. In any case, in the current environment, I think it is worth to highlight that we have been able to rapidly adapt our supply chain to ensure uninterrupted product flow to our stores globally using a combination of different means of transport, guaranteeing that we are able to feed our central inventory position.

To complete the analysis of the gross margin performance, I think it's important also to highlight some -- a few key points. First of all, in relation to proximity sourcing, I would say the diversification of our sourcing model in terms of origin of goods and a combination of proximity and non-proximity sourcing, continues to be key to give us flexibility and to adapt rapidly our supply chain.

Secondly, in relation to transport cost, please keep in mind that there is a lag effect between the transportation of goods and the impact on the cost of goods sold, which means that the impact on the higher transport costs and fuel prices in the first quarter has so far been limited.

And third, and as we mentioned during the presentation, I think it's also relevant that we have benefited from our FX sourcing tailwind in Q1 from a weaker U.S. dollar, which as you will assume, will be reduced over the next few quarters.

All in all, I think it's as a final remark to highlight that we have to reiterate that the current environment, it is included within our gross margin guidance of plus/minus 50 basis points for the full year. Thank you.

The next question comes from Georgina Johanan from JPMorgan.

Just following on some of your comments about the transportation and higher costs coming in, in future quarters. Just wondering if other than sort of general execution of the business model, if there are mitigation opportunities that you're considering around maybe pricing increases or other kind of new levers of efficiencies in the business, please? If you could also just help us understand the calendar effects you mentioned in the current trading period, that would be really helpful as well, please.

Georgina, thank you for your questions. So I think the first part of your question, I think what's important here is the operational capacity that we have at the group. I think you're seeing, as we are, the current geopolitical situation. But I think that one of the key strengths for the group is the sourcing and logistics model that we have. And I think naturally, in the current environment, it requires a very high level of operational coordination and flexibility. But I think in our view, this is actually precisely one of the structural strengths that the Inditex business model has. So I think one of the capacities that we have is the flexibility and adaptability, not only in terms of where we're sourcing. Proximity plays a role here, obviously, but I think also in terms of adaptation of the transportation methods. And I think that's one of the things that we've been trying to highlight, the fact that we're using different combination of modes and even in certain cases, multimodal solutions where we think it's appropriate.

I think you had a second question related to calendar impacts in the trading? So I think maybe, Andrés, you want to cover that?

Thank you, Gorka, and thank you, Georgina, for your question. Regarding the trading update, we would like to say that we are very pleased with the strong evolution of the sales at the start of Q2. It is clear that this continues to reflect the good reception of our Spring/Summer collections and of course, the remarkable execution of our business model across all channels and end markets.

All in all, we do believe it is important to interpret this short trading period with caution, which means that this is only 4 weeks. So remember that last year, we provided 5 weeks. So firstly, and as we mentioned in the press release, this short trading period has been positively impacted by those calendar effects that came in later in the previous year.

And secondly, I think it's also to highlight important. In 2025, comparables get progressively stronger as the year goes on, most notably, as you perfectly know, in the second half. So going forward, the growth algorithm for the group hasn't changed, and you should consider this when thinking about the growth for the rest of the year. Thank you.

The next question comes from Warwick Okines from BNP.

I was just wondering if you could talk a little bit more about operating costs. I appreciate, you flagged that they grew broadly in line with sales. They did actually grow a little bit ahead of sales, although only a little bit. Where perhaps is the inflation coming from? Is it because of strong online growth or maybe the acceleration of space or maybe it's because of the new distribution logistics centers coming on stream? Maybe just comment around the growth of OpEx, please?

Sure. Thanks, Warwick. So I think with regards to OpEx, I mean, you're right, what we pointed to was basically at the top line, we're seeing growth of around 6%, and OpEx growth, the same around 6%, right? I think you have to remind yourself that the objective that we have in the company is to have stable margins in the medium term. So there's a lot of reinvestment activities that we're doing focused on the customer experience in the group. And I think we've talked about this in the past.

You should also take into consideration, for example, the FX impact. In the quarter where you have a strong FX impact on the top line, you have to remember that it's not symmetrical as you go down the P&L. And so in that sense, when you take that into consideration, I think you'll better understand our comments. Thank you.

The next question comes from Anne Critchlow from Berenberg.

Would it be possible to give an idea of how great the impact of the Middle East performance was in Q1 and current trading? So for example, could you give us an idea of constant currency sales growth in Q1 current trading stripping out the Middle East?

Great. So I think with regards to the Middle East, let me just preface by saying we have around 480 stores in the region. We're operating under a franchise model, which I know that you guys are all aware. And that today, all of these stores are open. I think the geopolitical conditions are having an impact on the sales in the Middle East region. But I'd also highlight the fact that it is a diverse region and that there are different countries having different impacts.

All in all, I think the main message that we're trying to send is that the group has been able to perform in the first quarter and deliver a strong growth. And I think that's a good reflection of the broad diversification that the business has.

The next question comes from Monique Pollard from Citi.

I just had one question. As we think a little bit more about that evolution of the gross margin through the year on product costs, so whether or not conversations that you're having with suppliers at the moment, you're seeing some upward pressure on product costs, particularly around polyester pricing, just given the oil price impact we've seen.

Thank you. So I think you're right. We have seen increase in costs, for example, in cotton and other raw materials in the last few months. However, you have to take into consideration that these cost of textiles that you're seeing in the market don't really have a significant or they're not a significant part of the cost of goods sold as it's built up, right? So I think the biggest driver for us for gross margin, and I think this covers most of the questions that we've had up to now, is really the performance and the execution of the business model.

In terms of raw materials, to give you a little bit more color, I think 57% of the raw materials that we consume are biological. And we have 27%, which are polyester. And I think an important point to highlight here is that almost all of that polyester is recycled. Thank you.

The next question comes from Richard Chamberlain from RBC.

My question is on pricing, please. So I just wonder what you're seeing there, particularly in the U.S. market? Is some -- is mainly the growth still volume driven? And are you seeing a big difference in average compared to like-for-like selling prices?

Great. Yes, I think you hit the nail on the head there. I think what we continue to see, not only in the U.S., but broadly speaking, is growth from the group is coming from volume and not through prices. We have a relatively stable pricing policy that can adjust in any market in order to maintain our relative price position, but I think that's the key point there. It's volume-driven.

The U.S. is a very relevant market for us, and we continue to see a lot of opportunities. And as our CEO has mentioned in the past, we're executing a strategy of selective growth in the market. And I think that despite the good results that we're seeing in the online and the physical stores, we still see more opportunities for growth because we do have a low market share and it's fragmented market. And I think that the growth, in that sense, is in our hands, and it's not really dependent on the performance of the broader market. Thank you.

The next question is from Grace Smalley from Morgan Stanley.

I just have a quick one on D&A please, which was slightly higher than we expected in the first quarter. Could you just help us with if there's any drivers in particular to call out within that? And if there were any one-offs for example? And then just what are the factors we should be considering when modeling that D&A line going forward?

Thank you, Grace. Thank you for your question. As you have seen, D&A increased by 8% in Q1 2026, following a 3% increase in fiscal year 2025. There are several factors behind this evolution. However, it is difficult to provide, in this sense, a precise depreciation guidance for 2026. As I mentioned, the line is affected by multiple variables.

One of the main drivers of the evolution, as you can imagine, in Q1, is the extraordinary CapEx executed in 2024 and 2025, which is now in use. Secondly, I think it's also important to mention that we have here in this line, the depreciation of the right-of-use assets, which represents a significant component of the D&A line. And this is influenced by the length and the structure of the lease contracts, including, of course, break clauses, also the variable rent component and the impact of the renegotiations and the interest rate-related assumptions.

And finally, you have also to consider that when looking to D&A line, we have to take into consideration that we continue executing our retail optimization program, which may also affect, taking into account the quarterly evolution of this figure. Thank you.

The next question comes from James Grzinic from Jefferies.

Yes. Just a super quick one, really, and I guess it goes to the point that you just mentioned on the retail optimization program. I think it was about a year ago, you told us that 30% of Zara physical sales, in-store sales were through self checkouts. Can you please update us on what the numbers has become a year later?

So I think -- I can confirm that the numbers have, of course, increased. I think we're fully now rolled out in terms of the self-checkouts, the hardware and the soft tags, more importantly. I think the combination of all of those is really what helps to drive. What we're seeing is that everywhere that it's implemented, the uptake and the use by the customers is increasing significantly. I think that's what we can tell you at this stage.

That concludes the questions for today. Let's move over to webcast questions. The first of which relates to the state of the consumer. Can you give us an update on consumer behavior, potential impact from inflation in the U.S. or Europe, please?

Yes. I think I touched on part of this question before, I think with Richard's question. I mean, what we're seeing is that a lot of growth opportunities, we have low market shares, and we really do think that the growth is in our hands. We're not seeing anything at this stage, and we think that it's more dependent on the execution of the business model, having the capacity of identifying the trends and really reacting in a short period of time in order to capture that growth. So we're not really calling out any significant impacts anywhere. Thank you.

The next question on the webcast platform relates to Zara, a potential average -- higher average selling prices. Perhaps you can give us some color on this, please?

Yes. I think, again, I think I answered this related to the U.S., but basically, broadly speaking, in Zara, everything is primarily volume-driven. And I think that the authority that we have in the market is through the product, fashion proposition and not the pricing. So there hasn't been a change here at all.

As I mentioned before, we have a very stable pricing policy that, of course, can take into consideration some adjustments in any given market, but basically with the objective from a commercial perspective to maintain our relative position in each of those markets. Thank you.

Thank you. That concludes the webcast questions for today.

It was good to see so many people participating in today's presentation. For any additional questions, feel free to get in touch with Investor Relations department, and we look forward to welcoming you back in September for the first half 2026 results.

Good morning to everybody. We'd like to thank you all for attending Inditex's Full Year 2025 Results Presentation. I'm James O'Shaughnessy, Investor Relations. The presentation today will be chaired by our CEO, Oscar Garcia Maceiras. We also have Andrés Sánchez, CFO; and Gorka García-Tapia, our Director of Investor Relations. Following the presentation this morning, we will hold a question-and-answer session, starting with the questions received on the phone, followed by those received on the webcast platform.

Let's take the disclaimer as read. Oscar?

Good morning, and welcome to our full year 2025 results presentation. It's great to see so many people joining us today. At the outset, we would like to acknowledge the current situation in the Middle East and express our thoughts with those affected. Ensuring the well-being and safety of our colleagues and the local communities we serve continues to be our highest priority.

The numbers we are providing this morning reflect the ability of our teams to honor the trust that millions of customers place in our 8 commercial formats every day, connecting with them, understanding their desires and delivering the best product and a differentiated experience underpinning our long-term growth opportunities. We have seen a very solid performance in 2025, both in terms of the top line and also in terms of profitability, despite the complex market environment we have all seen throughout the year.

The execution of our unique model has been very disciplined and coupled with the levels of diversification we enjoy, this adds to the resilience of our business. From the very start of the new fashion season at the beginning of last year, we all saw a picture of continual improvement in sales. What's worth highlighting was the high level of consistency in the P&L throughout the 4 quarters that make up the year. This brings out the point I wanted to make. The highly flexible business model we have here at Inditex permits us to react to very dynamic and changing market conditions in a way that is unique to us.

Clearly, collections across the year have been well received by our customers. The sales growth of 3.2% has been robust. Sales were positive across each of the concepts and in constant currency, they were positive across all geographical areas. Sales were also positive in both stores and online.

The strong execution of the business model has been key not only to the excellent gross margin performance, but also the very disciplined control of operating costs, which has been evident across the year. At the profitability level, net income increased 6% to EUR 6.2 billion.

Our financial strength allows us to fund sustainable long-term growth while continuing to deliver attractive returns to shareholders. We will propose a dividend for financial year 2025 of EUR 1.75 per share.

Our Spring/Summer collections have been very well received by customers. Store and online sales in constant currency between the 1st of February and the 8th of March grew 9% versus the same period in the previous year.

We continue to enjoy significant global growth opportunities. Our presence across 214 markets in conjunction with low market penetration affords us strong diversification benefits. These factors, combined with the fragmented nature of the sector, gives us confidence in our ability to further differentiate ourselves and drive sustainable long-term growth.

Our ongoing aspiration to offer customers around the world the very best retail experience, whether online or in-store, is encompassed in the strategy we call Retail Optimization. As a function of this strategy, which has been in place for a long period of time now, the quality of our store base has been continuously increasing over many years. In view of this, sales have grown 22% on a reported basis over the last 3 years, while the number of stores has reduced by 6% and net space has grown by 6%. This, I think, illustrates very well what we are trying to achieve, which is to continually reinforce the consistency of our long-term growth profile.

Gross space growth for 2026 is expected to be about 5%, in line with the last few years with a positive net space contribution to sales and a strong online performance. Ordinary capital expenditure in 2026 is expected to be around EUR 2.3 billion. After the 2-year extraordinary investment program, to increase logistics capacity, we continue to focus capital expenditure on our global store base, the online platform and the rollout of technology programs aimed at enhancing the level of integration, thereby underpinning the long-term growth of Inditex.

And now let's pass it over to Andrés, who will cover the financials.

Thank you, Oscar. As we can see from the results published today, Inditex has performed superbly over 2025. Sales, EBITDA and net income all reached new highs. The sales performance has been strong at plus 3.2%. The combination of good execution and an actively managed supply chain resulted in a solid gross margin performance. Operating expenses have been well managed, and this has resulted in a satisfactory level of operating leverage.

Consequently, EBITDA grew 5% to EUR 11.3 billion. This has flowed through to the bottom line with net income increasing 6% to EUR 6.2 billion. The group continues to generate significant funds from operations adjusted for leases with growth in the period of plus 7%. Our net cash position was EUR 11 billion at year-end.

Let me highlight that the evolution of sales in the year has been very satisfactory at plus 3.2%, reaching EUR 39.9 billion. In constant currency, that translates to plus 7%. This strong growth was very much across the board in stores and online across each of the concepts and in constant currency across all geographical areas. Looking at the year ahead, at exchange rates today, we expect a minus 1% top line FX impact in 2026, albeit with a notable first half weighting. 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 2025, gross profit increased 3.9% to EUR 23.2 billion, with a gross margin of 58.3%. This gross margin performance is best explained by the consistent execution of the business model we have seen across the year. Driven by the strength of our commercial teams in 2025, the company enjoyed the strongest gross margin performance in many years, particularly in the second half of the year. For 2026, a stable gross margin of plus or minus 50 basis points would be a reasonable expectation.

Over the year, we have been able to closely control operating expenses across all areas of the business. The financial accounts shows 39 basis points of operating leverage for the year. Taking into account all these charges, operating expenses grew 51 basis points below sales growth. The PBT margin reached 20.1% in the year. From what we have been talking about already, I am very comfortable with the operating performance of the business over 2025.

Inventory for the group at year-end on the 31st of January was down 2% compared to the closing position the year before. It is noteworthy that closing inventory quality was high. The net cash position was EUR 11 billion at year-end.

As you can see on your screens, lease adjusted funds from operations after fixed lease cash payments increased 7% to reach EUR 8.2 billion, and free cash flow reached EUR 4.7 billion.

Gorka, over to you now.

Thank you, Andrés. It's good to have you all here with us today. Building on the comments made at the 9-month mark, I would like to point out that 2025 has been a truly remarkable year. From a second half weighted sales profile, we have seen we are in the fortunate position of being able to say that growth was enjoyed by each of the concepts. This performance was spearheaded by consistent strategic execution and a laser focus on taking care of our customers.

Over the course of the year, we have strengthened our position in 41 markets through new store openings. Growth was strong, not only in terms of store sales, but also in terms of the growth of online. All concepts continue to deliver strong results and yet again contributed meaningfully to the overall performance of the group. This momentum reflects the strength of our diversified portfolio and the ability of our teams to demonstrate accuracy and precision. Looking ahead, we are confident in our ability to capitalize on new opportunities and to deliver sustainable long-term growth.

If you look at the table on your screens right now, you can see strong sales figures in all the concepts. This table is a good representation of the group's diversification by both product and customer base. You can see the PBT margin of the various concepts that have led to the group's overall PBT margin increasing 50 basis points to 20.1%.

With this in mind, I'll now hand you over to Oscar.

Many thanks, Gorka. We continue to see strong growth opportunities. The unique way in which we can react to fashion trends permits us to continually consolidate the market position we enjoy, providing Inditex with huge potential for the future. The diversification by 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 initiatives for the coming years.

Our fashion proposition shows our strong commitment to creativity, thanks to our talented teams that focus 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 at the core of our strategy.

We have recently reopened iconic Zara stores after refurbishments in Copenhagen, Shanghai East Nanjing Road and Boston Newbury. In terms of new markets, in 2026, the group will launch its first store in Curaçao. The rest of the concepts will be very active in 2026. Bershka will open its first stores in Brazil and the United States. Massimo Dutti will continue its expansion in the U.S. with new openings in Miami, Brickell and New York, SoHo. Massimo Dutti will also launch in new countries, including Denmark and Norway. Pull&Bear will also launch in Denmark. Zara Home will open its first stores in Ireland and Norway. And finally, Lefties will continue its expansion with its first stores in the U.K. and France.

The rollout of our soft tag alarm technology across stores continues to progress. This initiative complements the assisted checkout program and further strengthens our in-store technology ecosystem. It's delivering a meaningful enhancement to the customers' experience by facilitating product interaction and streamlining the purchasing process. The hardware is now in 100% of our physical stores and the new technology will be implemented in 90% of products across all our formats in the Spring/Summer collections in 2026.

Try-on is an AI-based virtual fitting system that allows customers to create a synthetic avatar from their own photos and generate images of that avatar wearing real products. Currently deployed in 43 markets with over 7 million sessions, it operates exclusively on zara.com and is being rolled out to the other concepts.

By 2025, we successfully met our water target, delivering a 26% reduction in water consumption across our supply chain compared to 2020.

Turning to fibers. Of the total textile fibers used in our garments during 2025, 88% were classified as lower impact fibers. 47% of the total fibers used were sourced from recycled materials. We remain on track towards our goal of reaching 100% lower-impact textile fiber usages by 2030.

Under our Supply Chain Environmental Transformation plan, we reduced total Scope 1, 2 and 3 emissions covered by Science-Based Targets by 11% versus our 2018 baseline. This includes an 88% reduction in Scope 1 and 2 emissions alongside a 7% reduction in Scope 3. These results demonstrate continued progress, both in our own operations and across our value chain.

We remain focused on attracting top talent, thanks to our dedicated teams who embrace our culture and values. A key factor in this is our commitment to training, with 3.4 million hours offered in 2025, which has allowed us to fill 80% of vacancies through the internal promotion of 9,100 of our professionals.

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, important investments have been made in recent years. We now operate in 214 markets. Most of these markets continue to be very fragmented in nature and in conjunction with a low market share, provide a great platform for future expansion.

The growth of annual gross space in 2026 is expected to be around 5%. We also expect net space contribution to sales to be positive with, of course, an additional good level of online performance. As I mentioned a few moments ago, with some of our key investments now in place, we can further focus on increasing our competitive differentiation, both in-store and online globally.

For 2026, we estimate ordinary capital expenditure of around EUR 2.3 billion. This investment will be mainly directed at optimizing our commercial space, the integration of several technological initiatives and the improvement of our online platforms with a view to underpinning the long-term growth of Inditex.

I'm going to finish with a couple of further comments. Spring/Summer collections have been very well received by our customers. Store and online sales in constant currency between the 1st of February and the 8th of March grew 9% over the same period in the previous year.

Our priority has always been to ensure the long-term growth of the business while offering an attractive dividend policy to shareholders. Inditex's dividend policy consists of a 60% ordinary payout and bonus dividends. For financial year 2025, the Board of Directors will propose at the Annual General Meeting a dividend of EUR 1.75 per share, composed of an ordinary dividend of EUR 1.20 and a bonus dividend of EUR 0.55 per share. The dividend will be made up of 2 equal payments to be paid on the 4th of May and on the 2nd of November 2026.

Thanks very much for taking part in our presentation today. We will be happy to answer any questions you may have.

The telephone Q&A session starts now. [Operator Instructions] We request that you limit yourself to only one question per turn, so we can maximize the number participants in the session. [Operator Instructions]

The first question goes to Warwick Okines from BNP. Go ahead, Warwick.

I just wanted to talk about the Middle East, if that's okay. I appreciate your comments at the beginning of the call, but maybe you could give a bit more detail about what's happening to your business there, perhaps start with the sort of proportion of sales, the mix of franchise operations you have there and what sort of closures you've had to go through in the last 10 days or so?

Thank you, Warwick. As you can imagine, we are monitoring the situation closely at this stage and focusing on supporting our teams in the markets affected. We have our franchisee network in the region. And in the last week, some of our stores in a number of markets have been temporarily impacted. This has had a slight impact on the trading update we have provided today. But in any case, as we have always mentioned, this trading update relates to a very short period of time. And currently, most of our stores are open in the region. Thank you.

The next question comes from Monique Pollard from Citi. Go ahead, Monique.

I was just interested if you could perhaps help us with how far in advance your sea and air freight rates get locked in and whether there's an element of spot pricing, just given the pretty dramatic moves we've seen in both sea and air freight rates as a result of the current conflict, please?

Thank you. In 2025, our gross margin increased 42 basis points to 58.3%. As we always mentioned, it is a consistently strong execution of our unique business model that has driven this gross margin performance, characterized mainly by maximizing sales at full price, also proximity sourcing and short lead times. In this sense, and over the last few years and despite significant impacts in our supply chains and currency markets, our gross margin has remained broadly stable.

As you would expect, we are also following developments in the market and our sourcing and logistic model, in any case, is diversified across regions and transport modes and giving us flexibility and certain level of resilience, should conditions change. In any case, our guidance for 2026 continues to be a stable margin plus/minus 50 basis points. Thank you.

Thank you, Andrés. The next question comes from Anne Critchlow from Berenberg. Go ahead, Anne.

My question is a follow-up to Monique's actually on inventory, and it was 2% lower, I guess, in reported terms year-on-year in January. You've had very strong current trading. So I'm just wondering if you're now a bit light on inventory and whether you've seen any supply chain challenges on the recent disruptions to airline schedules?

Great. Thank you. So I think with regards to inventory, you've seen what we've said in the presentation today, with minus 2%, down. And we've also mentioned, as we often do, the fact that the inventory is of high quality. And to that extent, with the trading that we've provided today, we have confidence for the year ahead, and we're not seeing anything significant in terms of disruptions at this stage. Thank you.

The next question comes from William Woods from Bernstein. Go ahead, William.

You saw a strong performance in Bershka and Stradivarius in the second half and the inflection versus H1. What do you think was the main driver of that inflection?

Great. So I think you've seen growth throughout all of the concepts that we have, starting with a more moderate sales growth at the beginning and then, of course, in the third quarter and then definitely in the fourth quarter and now starting in the trading update that we've provided with a good progression of sales. I think we always talk about the capacity that we have to react to fashion trends and in that sense, to capture what we're seeing in the market.

So I think that across the board, we're seeing good performance. In some cases, some of the concepts have been particularly more accurate in identifying the trends, and that can go away to explain their performance.

Thanks, Gorka. And the next question comes from Georgina Johanan from JPMorgan. Go ahead, Georgina.

I think you referenced that some of the investment that you're making this year will be in technical integration and also the further improvement of your online platforms. I was just wondering if you could give some more color around that and any specifics with regards to what you're doing perhaps differently this year to previous years to invest in those areas, please?

Thank you, Georgina. Well, as we mentioned during the presentation, for fiscal year 2026, we are expecting the CapEx -- the ordinary CapEx to be around EUR 2.3 billion with the investment mainly focused on commercial presence, technological integration and efficiency of our processes. CapEx investment from our point of view are further underpinning our long-term sustainable earnings growth and with a level of investment that is in line with the group's historical average and fully aligned with our disciplined and self-funded business model.

Capital allocation remains focused on generating attractive returns over the long term through projects that enhance the business model and the customer experience. And as you could see, operating cash flow continues to properly cover both investment and shareholder remuneration. Thank you.

Thank you, Oscar. The next question comes from Geoff Lowery from Redburn. Go ahead, Geoff.

A slightly high-level question, if I may. I'm very struck by how strong both your gross and EBIT margins are in the context of currencies and volatile end markets. Is there a level of margin at which you would be uncomfortable in trying and cap the business? Or are you okay with margins rising as a function of the quality of the execution?

Great. Thank you. So I think, first of all, you're right to call out the high level of margins that you're seeing. I think this is a great reflection of the strong execution of the business model. Going forward, we're always thinking about, and that's how we think about the business going forward, having stable margins. And we're really focusing on the long term, which is how we always run the business and not really focusing on any expansion of margins for the short-term gain. So it's really about stability of margins going forward, albeit it's true that with strong execution, we are at high levels at this stage.

The next question comes from Sreedhar Mahamkali from UBS. Go ahead, Sreedhar.

Perhaps just on the CapEx and how we should see that impacting the space because I think you've talked about investing in the stores and optimization. Does that mean the 5% gross space could convert to a bit more than what we saw last year in terms of net space, 1.5%? And how would that 5% gross space look by brand, please, by individual operating company?

Great. So I think that what we've given so far is we still have the guidance that we had provided before for the 5% gross space for 2026, with a positive contribution to sales from net space. As a reminder, in 2024, gross space was 5.8%, with net space contribution to sales of around 2%. In 2025, it was 5.3% gross space, with net contribution of just over 1.5%. And you see that in 2025, we've continued to do a lot of operations. We've done 190 openings, 293 closings, for example, and refurbishments and expansions.

Retail optimization program, as Oscar mentioned during the presentation, is underway, has been underway for many years, and you should expect this as a characteristic going forward. And I think with regards to your question, Sreedhar, of gross space for the following years, you'll have to wait until the end of 2026.

The next question comes from Matthew Clements from Barclays. Go ahead, Matthew.

You've got very consistent PBT margins across your concepts, Lefties is subsumed within Zara. But is its profitability profile comparable?

No. So I think PBT margins, you're seeing that are at very healthy levels. There's a bit of a range depending of the concepts that you can imagine. But I think this is a reflection that they all work under the same business model. And that when we have strong execution across the board, you see strong and robust PBT margins. But again, going back to one of my earlier comments, we should be expecting stable margins going forward.

The next question comes from Richard Chamberlain from RBC. Go ahead, Richard.

Richard, are you there?

We're now going to go over to the webcast platform today. The first question relates to AI. Perhaps you could give us an update on progress made in the area of AI, please.

Well, thanks for the question. As you can imagine, over the past few years, we have taken a deliberate approach to AI. Our priority was to build the right foundations, modern architecture, strong data platforms and robust governance. So we could deploy AI securely and at scale. With that groundwork now in place, we are effectively future-ready and able to integrate new AI capabilities quickly and in a controlled way. We are also testing and scaling initiatives such as try-on to enhance the customer experience, as mentioned today.

So for us, AI is not a stand-alone project. It's an integrated capability supporting both efficiency and our customer and employee experience. Thank you.

The next question on the webcast platform this morning relates to the United States. Perhaps you could give us an update on what you're seeing in that market, please.

Thank you. Well, the U.S. remains a very relevant market for us, and we continue to see opportunities to keep on executing our strategy of selective growth in the market. 2025 has been a year full of very relevant projects that we have been sharing with you quarter after quarter. Some examples have been the opening -- have been the opening of new flagship stores in LA, The Grove and Las Vegas, Forum Shops at Caesars Palace. We also arrived our state #26 with the opening of our store in Charlotte in North Carolina. And recently, in December, we reopened after an important refurbishment, our store in Newbury Street in Boston City Center.

2026 will also be a year full of exciting new projects. That will include the refurbishment of some of our iconic Zara stores in the Fifth Avenue in New York, the relocation of our store in the 34th Street also in Manhattan in New York or Lincoln Road in Miami.

Also, we can confirm, as we mentioned during the call, that Bershka after a very successful online performance in the states will open its first 2 stores in Miami and Massimo Dutti will also open new stores in Miami, Brickell and New York, SoHo in 2026.

We will end 2026 with around 110 stores in the states and also our online sales continue to grow very well. So as we mentioned in the past, our online footprint also supports our physical sales and vice versa. Thank you.

Thank you, Oscar. The next question on the webcast platform relates to sportswear or athleisure. Could you give us a little bit on your strategy in this area, please?

Well, Oysho grew 16% last year to EUR 960 million of sales and in fact, is in the middle of a process of expanding into new countries. Just a reminder, in 2025, we opened our first Oysho stores in Germany, in Berlin and Hamburg. Also in the Netherlands that we are about to open our second store in Van Baerlestraat after the opening of our first store in Kalverstraat also in Amsterdam. And for instance, in the U.K., we entered the market in 2023. And today, we have 3 physical stores and very good online sales. So many opportunities to keep on growing the format.

And also Zara Athleticz continues to perform very well as a collection within Zara Men, both with our -- in our stand-alone Zara Man stores and with specific corners for athletics in the rest of our Zara stores. So we consider that both approaches reflect our aim to be even more relevant in the space of the athleisure and lifestyle, very aligned with what our customers are looking for. Thank you.

That completes the webcast questions for today. Thank you.

Thanks again, everybody, for 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 all again in June. Thank you.

Good morning, and [Foreign Language]. We're happy to welcome you here today for Inditex' 9 Month 2025 Results Presentation. I'm James O'Shaughnessy, Investor Relations. The presentation today will be chaired by our CEO, Oscar Garcia Maceiras. As well as Oscar, we also have Andrés Sánchez, our CFO; and Gorka García-Tapia, Director of Investor Relations. Following this presentation, we will open the floor to a question-and-answer session, starting with the questions received on the phone and we'll then proceed to the webcast platform. Let's take the disclaimer as read. Oscar.

Good morning, and welcome to our results presentation. Thank you for joining us today. In the 9 months of 2025, we have generated a strong performance with sales growth in a complex market environment, while maintaining very satisfactory levels of profitability. This is all down to the consistent and strong execution of the group. Our high levels of diversification have underlined the resilience of our business model. This performance, as always, comes from the 4 key sources of strength that we have, our unique fashion proposition, our increasingly optimized customer experience, our focus on sustainability and the quality and commitment of our people. Our differentiation in the market is as a result of these factors.

As you have already seen, our autumn/winter collections have been well received by customers. Andrés will provide some color on the third quarter results shortly.

In the 9 months of 2025, sales in constant currency increased by 6.2%. This satisfactory growth rate extended to both stores and online. Sales were positive across each of the concepts and in constant currency across all geographies.

In the 9 months of 2025, sales grew by 2.7% to reach EUR 28.2 billion. It's clear to see from the figures we have released this morning that good execution of the model has permitted us to generate both an excellent gross margin and also to exhibit disciplined cost control. Profit before tax increased by 3.6% to EUR 6 billion. At the bottom line, net income increased by 3.9%, to EUR 4.6 billion. This strong performance has continued into the fourth quarter. Store and online sales in constant currency between the 1st of November and the 1st of December grew by 10.6%. Between the 1st of November and the 24th of November, the sales growth in constant currency was 9%.

Our presence across 214 markets in conjunction with low market penetration in almost all of these countries supports our diversification. We continue to enjoy significant global growth opportunities. This confidence comes from the fact that we have a unique model that permits us to build up on the increasing levels of differentiation. And now let's pass over to Andres, who will cover the numbers.

Thanks, Oscar. Before turning to our 9-month figures, I would like to briefly comment on the performance over the third quarter. As you can see, sales grew at 4.9%, impacted by about 350 basis points of currency headwinds. Gross margin expanded 79 basis points, primarily driven by a strong execution of the business model. Playing a lesser role, but worth mentioning in anyway, we also had the negative currency impact on sales, as I mentioned previously, as well as a favorable U.S. dollar tailwind from our sourcing.

OpEx in the period has been tightly controlled, growing 3%. Net profit rose 9%. Moving on to the 9-month figures now. You can see from the results released earlier this morning, and I hope you will agree with me that our performance as a company has been exemplary. In the face of substantial currency headwinds, our sales performance was robust at plus 2.7%. As a consequence of the disciplined management of operating expenses over the period, we can see a meaningful amount of operating leverage. There is no structural change taking place here. This is purely a result of good execution and a good example of the flexibility of the business model.

EBITDA advanced 4.2% to reach EUR 8.3 billion, while PBT increased 3.6% to EUR 6 billion, resulting in a PBT margin of 21.2%. Net income increased nicely at 3.9% to EUR 4.6 billion. The sales line has progressed well at plus 2.7% and has reached EUR 28.2 billion. In constant currency, that is sales growth of 6.2%. You will note that the third quarter saw the strongest sales growth for the year so far, offset by a negative currency impact, as I mentioned previously. Sales growth has been strong both in stores and online.

Furthermore, sales growth was positive across all concepts and in constant currency in all geographies. At current exchange rates, the company reiterates its expectation of around minus 4% top line currency impact in the full year 2025. Over the first 9 months of 2025, the gross profit increased 3.2% to EUR 16.8 billion. The best explanation for this, as Oscar alluded to a few moments ago, is the successful execution of the business model over the period. The gross margin reached 59.7%.

We reiterate our stable gross margin guidance for the full year 2025, perhaps with a slight bias to the positive side of the usual range we provide. Over the 9-month trading period, we've been able to closely monitor and control operating expenses across all departments and business areas. The accounts show 29 basis points of operating leverage for the 9 months. Taking into account all these charges, operating expenses grew 33 basis points below sales growth. In fact, on a stand-alone basis, Q3 also saw operating leverage of 187 basis points.

Our structural negative operating working capital comes as a result of our model. As per usual, the evolution of operating working capital is aligned with the performance of the business over the period. We consider the quality of the closing inventory to be high. The net cash position was EUR 11.3 billion at the end of the period. And now Gorka, over to you.

Thanks, Andres. Over the 9 months of 2025, the sales performance of the group has been remarkable. Perhaps one could say back-end weighted in terms of sales performance over the whole 9 months, but there is no doubt that the execution and commercial discipline has been good throughout as is reflected by the integrity of the P&L over the period. This strong performance was consistent across all concepts. We're happy with the execution of the model over the period.

Our global store expansion plan continues. In the 9 months, we opened stores across 39 markets all across the globe. This quarter, Bershka entered Denmark with its first store in Copenhagen. Oysho continues with its European expansion. After opening its first store in Amsterdam in September, it is opening its second store in Germany and Berlin, a market where it has been performing strongly online. The execution of the concepts have been highly satisfactory. Store sales have been strong. Online sales have been great. So all around an excellent performance.

Let's stop for a few moments just to bring out an aspect of our business that sometimes passes people by, our diversification. Whether you're talking about diversification by number of concepts or by channel, online versus stores or by geography, as we've already mentioned, we have online presence in 214 markets, 97 markets if you're talking about physical stores. We're a company that enjoys a very broad level of diversification. We also have over 70 independent design teams across our 8 concepts looking to capture and react to fashion trends.

Even if we're referring to diversification by sourcing markets, we source from over 50 different markets. This diversification has added an extra layer of resilience to our business model, as has been evidenced throughout this year. And now back to you, Oscar.

Thank you, Gorka. One of our goals is to continually strengthen the key elements that are at the heart of today's results. Our priority remains to continually increase the appeal of our fashion proposition. Creativity, innovation, design and quality at defining features of our collections and a key focus. As Gorka has just highlighted, we have more than 70 design teams across 8 concepts. All of them apply a meticulous design process that impacts every detail of our garments and collections, while striving to provide the latest quality fashion to customers around the world.

The results of this unique approach can be clearly seen in the collections we offer every season and our rapid response to customer demands. We continue generating a very broad range of fashion propositions for each of our differentiated concepts. The focus on an ever more enhanced customer experience includes the continuous process of upgrading stores with strong architectural features and with highly curated internal spaces. One of the recent flagship projects has been the relocation of the Zara store in Osaka Shinsaibashi with a special Zacaffe on the top floor.

With around 2,000 square meters across 4 floors, the new store combines Japanese tradition and contemporary design. Similar to other projects in different countries, the existing Zara store nearby will become a stand-alone Zara Man store. Since Zara arrived in the country in 1998 with its first store in Shibuya, Tokyo, it has improved our commercial presence today reaching 64 stores spread throughout Japan. We continue to see many opportunities to improve our presence in the world's prime locations as well as expanding to new cities and new territories. We continue innovating in how we enhance the customer experience.

An example of this is our recently opened store in Diagonal Barcelona after a refurbishment designed in collaboration with Vincent Van Duysen. The store showcases our collections in a very unique and curated way. This week, we are opening a Zara Man stand-alone store in Palazzo Verospi, Rome as well as our store in Charlotte, North Carolina, expanding to our 26th state in the United States. For that same market, in October, we opened a new store in Las Vegas Forum Shops at Ceasars Palace. Of course, the improvement of our customer experience is also fostered, thanks to our use of technology.

As you know, in 2025, we are rolling out the new security technology in the concepts beginning with Bershka and Pull&Bear. The implementation was completed in Zara in 2024, and the feedback in the first full year of operation has been very positive. On the occasion of its 50th anniversary, Zara has presented the capsule collection 50 Creators, a solidarity project that brings together 50 professionals from different creative fields. Zara will donate all profits to the Women's Earth Alliance, an organization that promotes female leadership in environmental and community initiatives.

On the 18th of November, the opening of the new Zara Home for&from store in Porto was celebrated. With it, the group reaches a total of 17 stores of this format that since 2002 have generated job opportunities in Spain, Portugal, Italy and Mexico for almost 1,000 people with different disabilities in collaboration with local NGOs. In terms of Inditex's potential for long-term growth, in the current year, we are executing investments that are scaling up our capabilities and generating efficiencies that are being reinvested back into the business, increasing our competitive differentiation.

The growth of annual gross space in the period 2025 to 2026 is expected to be around 5%. Over this time frame, Inditex expects net space to be positive, of course, in conjunction with strong online sales. We operate in 214 markets. In the vast majority of these markets, we have a very low market share of a sector which remains very fragmented. These 2 factors alone help to underpin the strong growth opportunities we see ahead of us. For 2025, we estimate ordinary capital expenditure of approximately EUR 1.8 billion.

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. In light of our view on Inditex's strong long-term growth opportunities, we have been rolling out the logistics expansion plan. This 2-year extraordinary investment program focusing 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.

In October of this year, the new building for Zara in Arteixo, A Coruña was inaugurated. This building is over 200,000 square meters in size and houses the product department teams for Zara Woman and Zara Kids with sustainability and technology as relevant features of this new space. A brief note on dividends. The final dividend payment for 2024 of EUR 0.84 per share was made on the 3rd of November. I would like to leave you with a brief comment on our current trading.

Our autumn/winter collections have been well received by customers. Store and online sales in constant currency between the 1st of November and the 1st of December 2025 increased 10.6%. Between the 1st of November and the 24th of November, the sales growth in constant currency was 9%. Thanks to everyone for taking part in our presentation this morning. That's it for today. We will be happy to answer any questions you have.

[Operator Instructions] The first question goes to Monique Pollard from Citi.

I was just interested in understanding from you, latest press reports are suggesting that the EU are planning to bring forward the legislation, which will remove duties exemptions on low-value parcels, the de minimis rules and whether you think that would remove some competitive pressure going into 2026 and 2027, please?

Thank you, Monique. Thank you for your question. First of all, I'm going to keep my comments focused on Inditex rather than speak of the competitive landscape or any other competitors that you're referring to. You know that we don't use the de minimis rules in the way that we operate. We're focused on identifying the trends in the market, reacting as quick as possible. The business model that we're doing has been executing quite strong throughout this quarter. And as you've seen, we've come out at the beginning of quarter 4 with a strong trading update as well.

The next question comes from Geoff Lowery from Redburn.

Could you talk a little bit more about your step change in logistics infrastructure, in particular, what you think it can do for you in terms of future capacity, operating efficiency and how quickly you expect to really sort of bring it into full use.

Great. Thank you, Geoff. I mean we're talking about logistics capacities, and you know the 2-year extraordinary CapEx program that we have, EUR 1.8 billion for the 2 years that we've been investing that we're going to be finishing up at the end of this year. We've mentioned during the presentation that this program is on track. You know that Zaragoza II, one of the major logistics centers that we've been talking about is now up and running, and we're just at the beginning of that ramp-up stage. Remember that the purpose of this logistics plan was to capture the future growth that we're seeing. And I think that in a way with the results today, you're really seeing reflected the growth that we're talking about for future. Thank you.

The next question today comes from Warwick Okines from BNP Exane.

You've talked a bit about operating leverage on the call. And you also talked about wanting to reinvest the benefits of efficiency. Do you think it's reasonable to assume that your staff costs grow more slowly than sales in the future?

Thank you. In 9 months, as you have seen from our release, our OpEx grew slightly below sales, 29 basis points. If you look in Q3, that growth was even lower with an operating leverage of 187 basis points. As you see, those figures demonstrate the flexibility of our business model and the variable component of our OpEx line. As a reminder, you have to take into account that personnel costs and rental expenses, 2 of the main elements of this line are highly variable linked to the sales performance.

So as we mentioned, there is no structural change here. This is a purely result of good execution and a good example of the flexibility of the business model. In any case, operating margins over the medium to long term are expected to be stable with a focus on driving demand for our products by executing the business model successfully in order to continue to generate highly fashionable collections and therefore, maximizing sales at full price. Thank you.

The next question comes from Anne Critchlow from Berenberg.

My question is on the EBIT margin, which reached above 24% in the third quarter. So just wondering if there's a level above which you would not want to see the margin progress, but rather invest back into the customer proposition.

Thank you. We have seen positive evolution throughout the year so far. So in this sense, growth in 9 months was plus 6.2% in constant currency, with sales growth of plus 8.4% in Q3. So despite the significant impact on the supply chains and currency markets, our gross margin has remained broadly stable as a consequence of the consistent strong execution of our business model that continues allowing us to maximize full price sales and achieving this gross margin performance.

For this upcoming year, 2025, we reiterate our stable gross margin guidance. However, given the current trends, as we repeated, we are likely to be slightly positive within the range. Regarding OpEx in 9 months, and as we repeated, so we have a very flexible structure in terms of costs. So there is no changes here. It's a pure good execution and a good example of the flexibility of the business model, but we continue expecting operating margin to be stable over the medium to long term. Thank you.

The next question comes from Sreedhar Mahamkali from UBS.

I guess if I can just get you to comment on the U.S., please. What price adjustments have you made in the U.S., what customer response have you seen and what are your thoughts on the potential for expansion in the midterm here? Has anything changed?

Thanks for the question. Well, we have mentioned several times in previous calls, U.S. is a very relevant market for us, and we continue to see opportunities to keep on executing our strategy of selective growth in that market. We should bear in mind that despite good results, we have a low market share, and we believe that growth is in our hands, not dependent on the performance of the broader market. 2025 has been a year full of relevant projects for us. Some examples have been the opening of our new flagship stores in L.A., The Grove, the recent opening of our store in Las Vegas Forum Shops at Ceasars Palace.

As we mentioned during the presentation, this week, we are arriving at our 26th state with the opening of our store in Charlotte, North Carolina, and also, this same week, we are reopening after an important refurbishment, our store in Newbury Street in Boston City Center. 2026, we will be also full of new exciting projects the opening of our flagship store in 400 Post Street in San Francisco, an important refurbishment of our iconic Zara store in Fifth Avenue in New York and also, we can confirm that Bershka after a successful online performance in the U.S. will open in 2026, its first 2 stores in Miami area.

The next question goes to James Grzinic from Jefferies.

Really a factual question. I think you told us back in Q1 that the percentage of in-store data sales that were going through self-checkouts were around 30%. Can we have an update on what that number has reached now? That would be very helpful.

Great. So I think you're right. We're talking about assisted checkouts, which have been implemented throughout the group. Remember that this is also in conjunction with soft tags, as the soft tag rollout really enhances the use of assisted checkouts for obvious reasons. And as this progresses throughout the year and the next year with the new concepts of Bershka and Pull&Bear that we're rolling soft tags out, I think that this is going to have an increasing impact.

The percentage of sales process through ACOs has been progressing nicely since we last spoke. I think what I can tell you at this stage, at least, is that in some of the larger flagship stores that really drive a lot of traffic, where you would think that these ACOs really should be coming in, in terms of usage, we're seeing close to 90% of total transactions in some of those stores. Thank you.

The next question comes from Georgina Johanan from JPMorgan.

I just wanted to ask a question on AI, and I appreciate it's sort of quite a high level at the moment. But how are you using AI in the business already in terms of driving efficiencies, but also thinking about ways to sort of support the consumer performance from here? And just any thoughts on how that would sort of develop over the coming 12 months would be really helpful, please.

Sure. So I think you know that we've been historically a company that's really been data-driven for many years. We're trying to capture the trends in the market, reacting real time and adjusting our product offering through the in-season sourcing that we do in order to provide these trends into the market and capture that full price sales.

What I would say initially with regards to AI, I think we're at a very incipient moment of artificial intelligence. And what we see at this stage is that AI is a tool that can really empower our people, but not really substitute them, right? There are a series of different things that we're doing, both on the web page with regards to, for example, concept searches, which is, I think, is a novel idea with regards to how you find a product on our web page.

And of course, you can imagine in some of the back office functions, AI is really a great tool to go through contracts of different sorts and pull out interesting information. I hope that's helpful.

We're going to proceed with the webcast questions now. We've had a few today. The first of which is, can you comment on why you took the decision to give a short trading update, please?

Sure. So before I answer this question, maybe I'd just highlight the fact that in this particular quarter, it is a relatively short period. So we're talking about the 1st of November to the 1st of December. So for the rest of the year, we still have 2 whole months left. Secondly, you've seen that in the third quarter, we had constant currency sales of about 8.4%, and that's really still coming through in the trading update that we've provided of 10.6%, showing that we've started the fourth quarter well.

We've also provided that 1st of November to 24th of November with a constant currency sales of 9%. And the reason we've provided the shorter period and that 9% is with the purpose of stripping out the last week for obvious reasons, as we think that this is a better reflection of the commercial sentiment our teams are seeing as of today in the market. In any case, I'd highlight that with regards to the last week, there's been no significant change in promotional activity this year, and we're completely focused on the execution of the business model.

And to that point, I think we've reiterated throughout the presentation that for 2025, we have -- we're looking at stable gross margin, albeit perhaps with the current trends with a slightly positive range of that range that we normally provide. Thank you.

The next webcast question relates to the concepts. Bershka, Stradivarius and Oysho are growing very strongly. Are you thinking about expanding these concepts? We've already spoken about the U.S. into perhaps other markets.

Well, thanks for the question. Well, we are happy with the positive performance of Zara and the rest of our concepts. I have already mentioned some projects for 2026 in the states, including the opening of our first Bershka stores in Miami area. And besides, we keep on identifying good opportunities for expansion of our concepts in the rest of the markets.

As an example, this year, this 2025 Stradivarius opening its first stores in Austria and Oysho in the Netherlands. We have the advantage of having not only a good knowledge of the different markets at group level, but also the advantage of having a global online presence for all of our concepts. Thank you.

The next webcast question also relates to the concepts. Can you comment on the growth strategy for Oysho. Growth in H1 for Oysho was 6% reported, the highest of the group.

Well, again, we are seeing good growth opportunities for all of our 8 concepts. In the case of Oysho, that concept has pivoted a few years ago into selling more athleisure and sportswear and developing a very good strategy in terms of creating an Oysho community. The consequence has been a very positive performance that is also consistent with the expansion to new countries. And we mentioned during the presentation that -- well, Oysho not only entering the Netherlands with its first store in Amsterdam, but also has just opened its second store in Germany in Berlin. So many good opportunities to keep on growing in the future.

The next webcast question. Inditex continues to experience good growth. Does this give you more confidence in your recent investments into stores and logistics?

Well, the growth that we have seen in recent years is driven by the good execution of our teams, our -- what we consider a unique business model and also a culture of investing to maintain the differentiation. We have to talk to you about investing in our retail optimization program for many years, building unique retail spaces that allows us to enhance the customer experience.

Our stores in Osaka Shinsaibashi and Barcelona Diagonal, just to provide you 2 examples mentioned during our presentation, reflect this approach. And we also continue to invest in store technology, including assisted checkout, as has been covered a question by Gorka with very positive feedback from customers. What we see is that these investments, together with the fashion proposition, are driving growth. And our 2-year logistics extraordinary investment plan is also consistent with this view about the potential future growth of the group. So I guess that you should expect us to continue to invest in the business in order to keep on capturing new growth opportunities.

Thank you. That concludes the webcast questions for today.

Well, thank you to all of those participating in the presentation today. For any additional questions you may have, please get in touch with our Investor Relations department and we will welcome you back in March for the full year 2025 results.

Buenos días and good morning to everyone today. A warm welcome to all those taking part in our half year 2025 results presentation. My name is James O'Shaughnessy, Investor Relations. The presentation today will be led by Inditex's CEO, Oscar Garcia Maceiras; our CFO, Andrés Sánchez; and Gorka García-Tapia, Director of Investor Relations.

[Operator Instructions] Let's take the disclaimer as read.

Over to you, Oscar.

Good morning. Welcome to our results presentation. It's good to be with you all today. In the first half of 2025, we have again achieved a solid performance with satisfactory sales in a complex market environment and keeping strong levels of profitability. The efficient execution accomplished by our teams demonstrates the strength of Inditex's business model.

This business model continues to be driven by our unique fashion proposition and increasingly optimized customer experience, our focus on sustainability and the quality and commitment of our teams. These factors continue to enhance our competitive differentiation.

Our Spring Summer collections have been well received by customers. We had a satisfactory sales growth of 1.6%. Sales in constant currency increased by 5.1%. It's evident from the figures we are providing this morning that the execution of the business model has also been strong, reflected in the good gross margin performance and by disciplined cost control. At the bottom line, net income increased 0.8% to EUR 2.8 billion. This satisfactory performance has continued going into the second half of the year. Store and online sales in constant currency between the 1st of August and the 8th of September grew 9%.

Our diversified presence across 214 markets in conjunction with a relatively low market penetration in most of these markets underpins our belief in the significant global growth opportunities we have ahead of us. This confidence comes from the fact that we have a unique model that permits us to build upon the increasing levels of differentiation we have seen in recent years.

And now let's move to Andrés to go over the numbers.

Thanks, Oscar. As you have seen in the report released early this morning, Inditex executed in a very consistent manner in the first semester of 2025. Sales performed well at plus 1.6%. Furthermore, by actively managing our supply chain, we have been able to generate a very good gross margin performance. In line with what we saw in the first quarter results, operating expenses in the first half have been closely monitored. EBITDA in turn increased 1.5% to reach EUR 5.1 billion. And net income grew by 0.8% to EUR 2.8 billion.

On the top line, I'll point out that sales reached 1.6% to reach EUR 18.4 billion. In constant currency, that translates to 5.1%. We saw consistent growth in sales in our integrated model across both channels. At current exchange rates, we expect a minus 4% top line currency impact for the full year 2025. We enjoy a presence in 214 markets as well as a low market share in the vast majority of these markets. It should also be pointed out that the sector as a whole continues to be very fragmented.

It is due to these factors that we see continued growth for Inditex over the medium to long term. In constant currency, all geographical areas had a positive sales evolution. In the first half of 2025, gross profit increased 1.5% to reach EUR 10.7 billion. The gross margin reached 58.3%. This gross margin performance serves as a demonstration of the good execution of the business model over the period despite a challenging market environment.

Based on the data we have at our disposal right now, for the full year 2025, we expect a stable gross margin of plus/minus 50 basis points. As you can see throughout the half year, we have been able to maintain firm control over operating expenses across the business. Operating expenses increased 2.2% in the first 6 months of 2025. It is worth highlighting that the PBT margin came in at 19.6%. Operating working capital remains negative as a result of the business model.

The development of operating working capital is very much aligned with the performance of the business over the period, as you would expect. In conjunction with the satisfactory operating performance we have seen in the first semester Inditex's inventory as of the 31st of July was 3% higher. It is important to note that the closing inventory at the end of the trading period was of high quality.

As you can see from this slide, we continue to generate very strong levels of cash flow. Funds from operations increased 5% to EUR 3.7 billion. Capital expenditure reached EUR 1.3 billion, reflecting the ordinary and extraordinary investments in 2025, focused on ensuring future growth. Cash flow in the period was impacted by the calendar of payments coming from the normalization of supply chain conditions over the last year relating to the Red Sea.

And now over to you, Gorka.

Thank you, Andrés. As Oscar and Andrés have alluded to already, we are content with the performance of the group in the first half of 2025 and with the overall execution of the model over the period. The global rollout of the optimization program continues to take place. As per usual, we are, of course, referring to new store openings, refurbishments, enlargements and absorptions. It may interest you to know that sales in constant currency have been positive across all concepts over the period.

To give you a taste of what we've been doing in the first 6 months of this year, Inditex opened stores in 35 different markets all across the globe. Each of the concepts with no exception, are participating in the global growth plan. We continue to expand our concepts into new markets. Stradivarius entered Austria in July with a store in Vienna. Tomorrow, 11th of September, Oysho opens its first store in the Netherlands in Amsterdam, Kalverstraat.

Finally, Manchester Trafford Centre is a good example of our active store optimization program. Taking advantage of a large real estate opportunity, Zara and Pull&Bear have all relocated to new stores with larger footprints, while Bershka has opened its first store in the mall. We'll go into more detail as to some of these activities shortly.

And now back to you, Oscar.

Thank you, Gorka. Our objective has always been to continually strengthen and reinforce the key pillars of our highly integrated business model. As has always been the case, our first priority is to enhance the appeal of our commercial proposition. After all, it is the creativity, innovation, design and quality of our collections that will determine our success going forward.

Thanks to our more than 700 designers and our prototype teams, every meticulous detail in the design process is taken care of, enabling us to offer the highest quality fashion to customers in all corners of the globe. The end result of our unique approach is the integration of the physical with the online experience in a seamless manner that permits us across multiple formats to rapidly react to changing fashion trends and offer the latest collections.

With our integrated store and online model, our teams have been able to take advantage of the growth opportunities we see across all channels, concepts and markets. Underlining this consistent level of growth are the new openings, enlargements and the refurbishments of stores in the very best locations, expanding into new cities and into new territories and launching new services that enhance the customers' shopping experience.

As Gorka has already mentioned, in August, Zara relocated to a new store in Manchester Trafford, which has dedicated spaces for our collections, including Zara Athleticz, which offers customers a sportwear fashion for them. Another example is the recent reopening of our store in Madrid Serrano. This iconic location includes our third The Apartment, a new way of interacting with our customers. Also available in Compostela Coruña and [indiscernible] Paris that offers the premium part of our Zara and Zara Home collections in a highly curated way.

The rollout of the soft-tag program at Zara was completed last year. This program adds to the existing in-store technology ecosystem with Click & Collect silos, assisted checkouts and drop-off points and sorters. We are using this as a springboard for the further integration of the online platforms with our increasingly digitalized stores for the years to come. The technology is being rolled out currently in Bershka and Pull&Bear.

Within the bringyourbag initiative and thanks to the reuse of shopping bags by our customers, we have reduced their consumption in our stores by 49%. We are investing the equivalent full amount raised from charging for recycled paper bags and envelopes in environmental projects in over 30 countries, in partnership with non-profit organizations such as Conservation International and WWF. Recently, we have formalized a new program, in collaboration with the international environmental organization, Ocean Conservancy, aimed at the protection of marine ecosystems and biodiversity.

This agreement, endowed by Inditex, includes the removal of more than 450 tonnes of plastics from beaches and areas of high environmental value, the collection of nets and fishing gear abandoned in the oceans and the promotion of zero waste projects for the collection and recovery of waste.

With a view to Inditex's long-term growth potential, in the current year, we are planning investments that will scale our capabilities, generate efficiencies and increase our competitive differentiation. The growth of annual gross space in the period 2025 to 2026 is expected to be around 5%. Over this same time period, Inditex expects net space to be positive along with strong online sales. For 2025, we estimate ordinary capital expenditure of approximately EUR 1.8 billion.

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. As we have already shared in recent results presentations, given our view on Inditex's strong long-term growth opportunities, we are in the process of executing the logistics expansion plan set for 2024 and 2025. This 2-year extraordinary investment program, focusing 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. The logistics expansion plan is on track.

The Zaragoza II I distribution center is now up and running. Our centers have the highest standards of sustainability and cutting-edge technology. We focus on productivity and team well-being. In July, Inditex invested in Theker Robotics, a start-up developing AI-driven logistics automation. A brief reminder on the dividend. The final dividend payment for 2024 of EUR 0.84 per share will be made on the 3rd of November 2025.

I would like to finish with a comment on our current performance. Autumn/Winter collections continue to be very well received by our customers. Store and online sales in constant currency increased 9% between the 1st of August and the 8th of September 2025 versus the same time period of 2024. Thank you all for attending this results presentation. That concludes our presentation for today.

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

[Operator Instructions] The first question comes from Geoff Lowery from Redburn.

It's not often that Inditex comments on markets, but you've used the interesting phrase of complex. Can you help us understand more exactly what you mean by that? Is it what you're seeing from the consumer? Is it a comment on supply chain or tariffs? Sort of just help us understand this a little bit more, please.

Thank you, Geoff. No, I mean, when we are talking about market and challenging conditions, we're really talking about the market as a whole. So you think of, for example, the tariffs and the trade wars and the consequence of the FX swings that we've seen over the period. So we're really just highlighting that. In any case, what we are also liking to mention is the fact that as you've seen the performance of the group in the quarter and the resulting gross margin, which we think is a good reflection of the strong execution of the unique business model that we have, we've been able to somehow overcome all of those headwinds. Thank you.

The next question comes from Anne Critchlow from Berenberg.

I had a question on Lefties because I believe it's stepping up expansion at this point. And I'm just wondering if there are any regions or countries where you think Lefties wouldn't be relevant and which countries and regions are the focus of store openings in the short to medium term?

Great. Thank you, Anne. I mean with regards to Lefties, we've talked about the fact that it already has an international presence. It originated with more focus in its heritage markets of Spain, Portugal and also Mexico. Currently, it has presence in 18 markets, and we are testing Lefties in a series of other markets. We've also reported today, as you've seen in the note, that Lefties currently has 210 stores versus last year's store count, which was about 198 stores. So we're just growing as we are with all concepts with a lot of opportunities that we see on a project-by-project basis. Thank you.

The next question comes from Monique Pollard from Citi.

My question is just coming back to this point of the strength of the gross margin in the second quarter or stability over the first half. I guess, as you point out, given the headwinds from the tariffs, et cetera, that has come in quite a bit better than expected. Just wondered if you could talk a bit about what you have done to manage the tariff impact, if there have been some consumer-focused price increases in the U.S., negotiations with suppliers, et cetera.

Thank you, Monique. Great. So with regards to tariffs, I think, first of all, I'd like to say that the current environment is difficult to predict, and we're, of course, continuously monitoring the situation, and it's quite fluid. We generally feel that as a company, we have 3 key tools at our disposal. And I think we've talked about this in the past. First of all, you have to consider that we are a global company and, therefore, we have a lot of experience with related to tariff regimes and changes of tariff regimes.

The second one is one point that we always highlight that we have a very broad-based diversification, both in terms of sales as well as in the sourcing. And I think this is a great advantage for us to manage all of these issues. And then finally, of course, the flexibility of the business model, which is also leveraged on that proximity sourcing that we always highlight.

I think that with regards to the tariffs in the U.S. specifically, we have a stable pricing policy that we're always talking about. And of course, all pricing activity, be it in the U.S. or any other geography is primarily driven by commercial decisions, not financial ones. And what we try to do in every market is maintain our relative position. So with all that in mind, we're quite confident with regards to the gross margin guidance for the year of plus/minus 50 basis points.

The next question comes from Sreedhar Mahamkali from UBS.

I guess if you could talk a little bit about online versus stores. Clearly, last couple of years, online has been growing considerably faster than stores. Do you think that is to continue? And as a result of the space growth we see this year is a good proxy for the medium term as well, please?

Great. Thank you, Sreedhar. As you know, we have a fully integrated business model. And the reason I mentioned this is because it's difficult to think of online growth without the physical store presence. So you really have to see it as a whole and not try to separate both channels as for us, really, we feel that it is one a consequence of the other. If you think of, for example, online sales without a store or store sales without online, it's difficult for us because of that fully integrated business model. I think what you should consider is that we continue growing and we see great opportunities of growth in both channels, in all markets and throughout all concepts.

The next question comes from Warwick Okines from BNP.

Perhaps you could just talk a bit more about the growth in the Americas region in the half. And in particular, just going back to March 2023 when you said that you'd have at least 30 expansion projects in the U.S. over 3 years. Are you on track to meet that number?

Thanks for the question. Well, the growth of the group is broad-based across all regions and concepts. And as you know, in the U.S., it's a very relevant market for us, and we continue to see opportunities to keep on executing that strategy of selective growth in the market. In 2025, we remain very active in the U.S. In June, for instance, we relocated to a new flagship store in L.A., The Grove with significant more space and upgraded customer experience.

Some additional projects have already been executed, including another openings, Boston CambridgeSide Mall or relocations, New York Hudson Yards. More projects for the rest of the year will be new openings, Las Vegas Forum Shops at Caesars. Our new Zara Man stand-alone store in Costa Mesa. Or enlargements like Boston Newbury or Austin, Texas.

For 2026, we are planning very relevant initiatives, refurbishments in iconic stores like New York Fifth Avenue, new openings for instance, the 400 Post Street, our new flagship store in San Francisco or the opening of the store in Charlotte that will imply the opening of our state #26 with stores in the U.S. And of course, all of them combined with solid -- very solid performance of our online platform in the states. We keep on exploring new opportunities for sure in the market for our different formats. Thank you.

The next question comes from James Grzinic from Jefferies.

Congratulations. Just had a quick one. I appreciate your guidance around gross margin. But I was wondering, when I think about the timing of supply chain cost deflation, FX tailwind building on sourcing, product cost deflation, should I be thinking that these start property building in the current autumn/winter ranges that are hitting the stores now? I would be curious on your thoughts about that dynamic and the timing of that, please?

Great. No, that's a good question. I think from our perspective, what we see is that, in general, the demand of our collection has always been driven by the ability of us to be able to execute the business model. And so that's how we're thinking about the second half of the year. I get your point with regards to, for example, FX, but you have to also consider that though we do have a sourcing in U.S. dollar, we have somewhat of a natural hedge on the sales side as well, which is what gives us a little bit of a confidence when we're talking about a stable gross margin of plus/minus 50 basis points. Thank you.

The next question comes from Richard Chamberlain from RBC.

I just had a question on working capital, please. I wondered if you could just explain the drivers of the working capital outflow that you've seen in the first half in the cash flow statement, in particular, the change in current liabilities, it's an EUR 811 million cash outflow by the looks of it in the first half.

Thank you for your question. As we explained during the presentation, this decline was driven primarily by the normalization of our supply chain conditions over the last year related to the Red Sea. So this has led to more normal payments during the period compared to the same period of last year. And this is, as we had explained during fiscal year 2024 results, would also explain why inventory levels have also fluctuated over the last 2 years, a slight shift in timing. This impact will normalize next year. Thank you.

We're going to move over to the webcast questions now. There's a couple of questions -- a few questions we've had today. The first of which relates to the new flagship store in Manchester. You recently opened a new flagship store in Manchester. Can you give us some color on this and your general view on the U.K., please?

Thanks for the question. Well, the U.K. is, of course, a very relevant market for us. We continue to see very good opportunities to keep on growing both for Zara and the other concepts in different locations. After recent relevant projects in cities like Liverpool or Birmingham and our recent flagship stores for Pull&Bear, Massimo Dutti, and Oysho in Oxford Street, London, we have taken advantage of our large real estate opportunity in Manchester Trafford Centre, as we mentioned during the presentation.

And this opportunity is allowing us to expand our Zara store over 40%, relocate Pull&Bear, open Bershka; and in the coming months, also to relocate our Stradivarius store. The experience of our customers has significantly improved as we are offering our different collections with a state-of-the-art technology that includes silos for online orders and returns and assisted checkout areas. For 2026, we will continue to be very active in the U.K. with plans, for instance, to refurbish some of our iconic stores in London, such as our Zara stores in Bond Street and Brompton Road. Thank you.

Thank you, Oscar. The next question on the webcast platform relates more to the younger concepts. Can you explain why some of the younger concepts have been growing quite so strongly recently, provide some color.

Thank you. Well, we are happy with the performance of our different concepts, of course, including Zara. Our other concepts are performing very well with the ambition of further diversifying our customer base and our product offering. We continue to see additional good opportunities to expand their presence in new markets.

We have just mentioned during our presentation 2 examples, the arrival of Stradivarius and Oysho to Austria and the Netherlands with the opening of our new stores in Donauzentrum, Vienna and Kalverstraat, Amsterdam. Another example is Denmark for Bershka that is about to open its first store in that market after having a very positive feedback in recent openings of the first stores in Sweden and India.

The next question relates more to the technology systems within the stores. Can you provide some more detail on the store technology ecosystem, including sorters, please?

As we have mentioned during the call, we are executing many projects to improve the customer experience in our stores, thanks to the rollout of soft-tag technology. Some of these projects involve customer-facing technology like assisted checkouts, Click & Collect and drop-off points. Customers feedback, as I have just mentioned, with the example of Manchester Trafford has been very positive with an increasing level of adoption in the different markets.

We are also introducing technology that impacts and improves the experience of our team behind the scenes in the stores. And one of these technologies, which we are rolling out in the stores are our sorters that support some processes that are key in order to make as quick as possible available to customers products that are temporarily outside the commercial floor in the stock rooms or fitting rooms or when new products arrive.

The next question on the webcast platform relates to the trading update. We had a good trading update of 9% going into the second half of the year. Can you provide some color on this, please?

Thanks for the question. Well, I guess that's obvious that we are seeing a positive evolution throughout the year. First quarter plus 4% in constant currency; second quarter, plus 6% in constant currency. And this morning, we are providing a trading update for the first 5 weeks of the third quarter, plus 9% that reflects an acceleration of the sales. We remain confident about the year ahead and, as always, focused on increasing the differentiation of the business model. The results that we have announced this morning demonstrate the strength of the model that, as we mentioned, in a complex environment keeps with high levels of profitability.

Thank you. And that concludes the webcast questions for today.

Thank you to all of those participating in the presentation today. For any additional questions you may have, please get in touch with our Investor Relations department, and we will welcome you back in December for the 9 months 2025 results.