Thank you. Good morning to everybody, and welcome to Inditex's half year 2019 results presentation.

I am here today with our CFO, Ignacio Fernández; and our Capital Markets Director, Marcos López. On this occasion, I am also joined by Carlos Crespo, our recently appointed CEO, who will focus on our strategic digital transformation.

This half year has been very much about the continued rollout of our long-term strategy. The result has been a very satisfactory level of growth.

Let me commence by highlighting that Inditex operates a highly differentiated, unique business model. The model that we've developed, allows us to operate our stores and our online business in such a highly integrated manner that it is practically seamless.

This brings with it, highly attractive growth opportunities going well into the future. The half year period saw our unique business model come into its own with a very strong execution.

Like-for-like sales came in strongly at plus 5%, with positive like-for-like growth across all geographical areas, across all concepts; and importantly, in both physical stores and online. We have continued to pursue the rollout of our fully integrated online offering on a global scale.

Net income grew 10%. The strong operating performance and the healthy working capital evolution has resulted in very strong cash generation.

These results position us nicely for the attractive growth opportunities ahead. We have continued to consolidate our global presence over the first half of 2019, as you can see on this chart, which demonstrates a high level of geographical diversification.

I am going to pass you over to Ignacio, who will provide you with an overview of the financial performance of the Group over the period.

Thank you. A quick reminder on the implementation of IFRS 16; IFRS 16 came into effect early this year and has been duly adopted.

As pointed out in March of this year, the changes have no impact on either the cash flows or the business itself. The new reporting standard will result in estimated increase of 2% to 4% net income fiscal year 2019 versus the former IAS 17.

Over the period, we saw growth in net sales of 7% to €12.8 billion. Growth in gross profit of €7 billion to €7.3 billion.

Profit before tax grew 9% to €2 billion. And net income increased 10% to €1.5 billion.

The impact of PBT of leases under the new IFRS 16 rules in the half year was plus €61 million, while the equivalent impact on net income was €46 million. The sales performance over the period was satisfactory with net sales growth of 7%.

As highlighted just know by Pablo, like-for-like sales growth was strong over the period at plus 5%, on top of 4% comparable in the prior year. We are pleased to say that like-for-like sales were positive in all geographical areas across all the concepts in both the stores and online.

The strong execution of the business model in the first half of 2019 is well reflected in the gross margin performance. The gross margin increased 12 basis points to 56.8%.

The gross profit itself increased by 7% to €7.3 billion; all the while, maintaining our usual commercial policy as unchanged. Once more, we continue to demonstrate tight control over operating expenses over the first half period.

Operating expense growth without the impact of leases under IFRS 16 rules in the half, would have been plus 6%. The financial results line on the P&L, includes an impact of leases on the IFRS 16 rules of €75 million.

The flexibility of the model we operate can be clearly seen in the healthy working capital performance. It's helped to drive the strong growth in operating working capital of 15% and the growth in the cash position of 15%.

Bringing in mind the idea of providing an attractive and predictable remuneration to our shareholders, relating to fiscal year 2018, the AGM approved a dividend increase of 17% to €0.88. €0.44 was paid on 2nd of May, and €0.44 is due to be paid on the 4 of November 2019.

I will now pass you over to Marcos, who will update you on the performance of the concepts.

We have continued our global expansion over the first half of 2019, having opened stores in 31 markets, so far, this fiscal year. Global online launches have also continued rapidly.

Zara represents approximately 70% of group sales and the younger concepts represent around 30%. The younger concepts grouped together, continue developing their operations satisfactorily.

I would like to highlight the strong sales of the group over the first half of 2019, all of them with positive like-for-likes. So far this year, Stradivarius has performed particularly strongly, while we have seen ongoing store optimization activity in Bershka and Pull&Bear.

I'll hand you over to Carlos, now, to make a few comments on some initiatives we've been working on over the period.

I would like to start by mentioning that our operations are increasingly seamless, in terms of our physical stores and our online operations interact with each other in order to provide our customers with exceptional level of service they have come to expect. Take a look at this photo, for example, which illustrates the new online Click&Collect [silo] at the Zara store in Milan, Corso Vittorio Emanuele.

Many of these initiatives are made possible by the rollout of such programs as the RFID program, and the inventory integration program; both of which are due to be fully rolled out across the globe by 2020. Back in March of this year, we launched Zara online in Brazil to a very warm welcome.

This was quickly followed in May with online launches for Zara in Saudi Arabia, United Arab Emirates, Lebanon, Egypt, Morocco, Indonesia, Serbia and Israel. Then came August, and we launched Zara online in Bahrain, Oman, Kuwait, Qatar and Jordan.

In keeping with this rapid pace of online launches, in September and October of this year, we expect to launch in South Africa, Colombia, Philippines and Ukraine. On the 17th of this month, Zara Home will launch on the Zara website in United Kingdom.

And now, I'll hand you back to Pablo.

Thank you. Our long-term strategy continues to be to invest in our stores, in order to further enhance the differentiation of our commercial offer.

This will be further supported by our efforts to make all stores fully digital and sustainable by the year 2020, in conjunction with the fully global online rollout. We expect to complete in the same year.

We will also continue to develop further coordination of the commercial offer, particularly across the concepts with initiatives like the previously mentioned launch of Zara Home onto the Zara U.K. webpage due to take place in September.

Let me comment on two recent initiatives to increase the differentiation of our stores. Just take a look at this wonderful new store image developed by Zara Man or the powerful new store image of Zara Kids.

I would like to refer to some very important enlargements all of them exceeding 4,000 square meters in size. First, the recent enlargement of the Zara flagship in Cevahir Mall in Istanbul opened last Friday.

Likewise, the enlargement of the Zara flagship in Dubai Mall will amplify our already strong presence there and we'll open tomorrow. And I would like to finish with our flagship in Barcelona in Paseo de Gracia this enlarged store is due to open in November.

As you can see from this picture next year, we aim to inaugurate a new building of 63,000 square meters to house the Zara online studios and other commercial functions. By 2020, we expect to announce that all concepts can offer online sales globally.

A good example of the seamless store and online execution can be seen in the Autumn Winter Campaign Editorial or the addition of Autumn Collection and the notes of color collection. Join Life, now features the denim from denim collection aimed at improving the sustainability of denim garment.

A few final comments on the outlook, we expect a strong organic growth to continue to feature to the end of 2019 as we pursue increased differentiation of our offering to customers. Ordinary capital expenditure is expected to come to €1.4 billion this year, of course accompanied by a strong free cash flow generation.

And our autumn winter collections have been well received. The store and online sales in local currencies, increased by 8% between the 1st of August and the 8th of September.

We reiterate our expectation of our 4% to 6% like-for-like. And that concludes the presentation today.

We'll be happy to answer any questions you may have.

My question is about the gross margin. Does this benefit this year due to IFRS 16, perhaps due to rent coming out of that line from distribution centers?

No, there is no impact from IFRS 16 in the gross margin. Because as you know, all our logistics our freehold.

So they are not affected by these regulations.

And just a second one on advertising. I was picking up that there has been increased traditional advertising by Inditex recently.

Is that the case and has your strategy changed in anyway?

No, not really - I mean globally our marketing expenditure is extremely low - that we believe very much. We've been based much more on the quality of our products and the quality of our stores, and on the quality of our online offer and here or there at a certain point in time we could do a little bit.

But nothing really has changed in terms of our strategy, related with that. In any case, you can see that if you analyze this first half results and taking out the IFRS impact that we have of course liberated during the period, which we think is extremely relevant.

Do you know that we always talk about analyzing our company not on a short period of time on a full year basis or at least on a six months basis. And you see cost liberating our profit and loss account, which we think is extremely relevant, extremely positive and healthy combining this full integrated approach.

We are doing the stores and online and as we were saying during the presentation with positive like-for-likes across all the different brands on the different geographies and both in stores and online. So we believe very much in the way we are executing our business model and at the same time being able globally to achieve cost leverage.

I had a question on the Americas, please looks like the performance there was pretty strong in the first half. I wondered if you wanted to call out any particular markets that are trading well ex currency and comment on the online performance there?

Thanks.

Well globally - we think that the most relevant element to mention is, that we have had positive like-for-like in all the geographies. I think this is the most relevant element to have in mind.

And then related with any particular period, you could have a higher growth in this or that area. But globally, we believe very much in this global execution of the model.

You were asking us about the Americas.

Yes.

And the area, we have had a good performance in North and South America but within that is more meaningful than that - the fact of having positive like-for-likes in all the different geographies. And in every market in every geographical area, we have this net positive growth both in stores and positive growth online.

So we believe as I was saying before, very much in the way we are executing our business model. We think we have had unique approach to this fully integrated approach between stores and online with - what we have been talking about this before with the RFID with the stock integration.

You can see also how we are able to manage the inventories now because this has a lot to do with this full integrated approach with this stock integration. So and that is why - as we always saying a short period of time, we prefer not to focus very much on this or that particular geographical area.

We think that the most relevant thing is to have this global approach. And even if you think for example sometimes I mentioned Spain, the market in which we have been for so many years.

And we continue having a constantly - a positive like-for-like sales growth evolution in this first half of the year. It is a 4% like-for-like sales growth evolution without any space increase in the Spanish market.

And so, we believe very much and it has to do also a lot that - with what we have been talking during the last few years. The store optimization program we continue investing in the stores.

We were presenting you today. Well, we have one - two very relevant openings tomorrow.

One is, Dubai Mall that we were mentioning, but the other one is in Madrid in Preciados we have enlarged the store. This is probably the most relevant high street in Madrid in terms of traffic and we used to have [indiscernible] now we have enlarged significantly and we will reopen tomorrow after our full refurbishment or Paseo de Gracia in Barcelona that's also after a huge enlargement, we will reopen in the month of November.

So we continue investing strongly in all the different geographical areas and developing our business. Sorry to have been so long.

No, it’s all right no thank you for the color. I mean it looks like a strong like-for-like sales of continued into the third quarter.

And I wondered if you could give us an idea of the comparable from last year versus that 8% you've reported this year for the most recent period. Because I guess - we had pretty warm weather - across the northern hemisphere in early autumn last year, so presumably the comparable was quite soft?

Yes but also you know that we don't like to focus very much on the very short-term performance within that. What is more relevant is that we reiterate this guidance - related with 4% to 6% like-for-like sales growth for the full year and of course for the second half.

In the first half, we have achieved 5% which is totally in line with our guidance and we prefer to focus like that. Yeah you remember, last autumn that there were some months that were stronger or weaker.

But globally, we have had a very healthy start of the season our collections have been quite well received as we were saying during the presentation. That is why we reiterate this 4% to 6% like-for-like sales growth guidance, much more than to focus on a very short period of time.

I had a question on space contribution. In the first half, clearly you had sales growth of 7% and 5% like-for-like service-based contribution, now down to 2%, it wasn't so long ago that space contribution was more like 5%, when do you think space contribution will hit zero, do you think in the next 12 to 18 months, there won't be any space contribution at all across the Group?

Andy, I think you should rephrase the question because you've mentioned the space contribution was 5 first and then you mentioned zero, were you talking about like-for-like?

No, the space contribution maybe two years ago was 5% in the first half that we've just seen the space contribution was down to 2%, should we continue to assume the space contribution declines and we may see no space contribution in the foreseeable future?

I don't think that you can extrapolate any negative decline in this space contribution was that basically what we have mentioned at the beginning of the year is where we’re expecting 5% to 6% growth space growth, obviously due to the quality of the openings that you see, absorptions remain an important part of the strategy, so 4% net contribution. And then with the usual conversion rates to look at the space contribution over a short period of time is a bit misleading because you have the calendar of openings, the absorptions and also all the different optimization activity, so we sustain what we mentioned at the beginning of the year.

And just as a follow-up in terms of online sales. Can you put a figure on what proportion of your online sales are fulfilled from store stock?

Now, I mean I assume that's an increasing percentage given all the work you're doing.

We prefer not to elaborate very much about that. As you know currently on the full-year basis, we disclose our global online sales growth and this in terms of stock integration is something very relevant in the sense of the way we operate our business and being able to operate the business with lays inventories is something which is becoming more and more relevant, but we prefer not to elaborate very much.

We always say that when we analyze this or that limited part of the business. Sometimes you have the risk of losing the global perspective and our approach to the management of the company is always thinking about the globality of the company in all the different areas, stores online store integration.

Do you also know that we offer online sales from the stores with the iPods and then at the same time, we have a stock integration then we have in-store deliveries, in-store returns. So it's a combination of the whole approach, which is a fully integrated approach between the stores and online.

And in a very unique way, I would say, the way we are running and developing our business from this point of view.

Yes, good morning everybody and just a couple of short questions. Firstly, is there any way you can split out what was full price sales growth out of the first half in comparison to the constant currency reported.

And secondly, has the sort of global rollout of online had any sort of notable contribution to the overall constant currency sales growth in the first half?

Well, regarding the first part of your question. We prefer to keep the global like-for-like sales growth figure.

And in terms of the activity during the season, there is nothing particularly relevant in terms of promotions or anything like that -- that most of our sales are full-price sales because of our business model and because of the way we operate our business. So there is nothing relevant from that point of view of nothing different from the global like-for-like sales growth figure.

And then related with the second part of your question. What we could say is that 99% of our online sales growth is organic.

So when we were mentioning this World Wide Web, this global online approach to all the different countries in the world, it has much more to do with making our products available for our existing or potential customers in the different countries than thinking that this is going to provide a huge amount of sales in the short term. So 99% of our online sales are organic.

Okay. And - sorry just going back to the first question.

So there hasn't been any sort of change in sort clearance dynamics or activity.

No, nothing, nothing. It's the normal execution of the business model.

You know the flexibility of our business model, the ability to react during the season and their working capital position that you see is extremely healthy at the end of the period and this is what is relevant for us.

I know you guide on square meter expansion and you've reiterated the expansion today but I just had a question about store openings and closures, are you still expecting to open 300 stores and absorbed 250 stores as you guided at the start of the year or is that slightly changed as you've move through the year?

No, there is no change to the broad estimate, I think as you have mentioned in your question. The main focus for us is the space growth and but especially the quality of the space that we open.

I think we have illustrated in the presentation three recent large shipments in the case of Cevahir in Istanbul, which is a terrific store, the case of Dubai Mall, which needs no explanation because one of the key stores in the world also Barcelona but we could have many of the stores, which we have recently opened like Madrid like Pamplona absolutely wonderful store is very much about the quality of what you offer, I mean a very, very precise manner. I think this has been the strategy since 2012.

So in any quarter or any short period of time, it's not something that worries us too much.

No, just an absolute thank you. I was just wondering because the net store numbers declined by 70 in the first half, your original guidance in place an increase of 120 net in the second half.

I just wanted to check that was still about the right estimates?

Again the key factor for us and the one that impacts the P&L and our commercial presence is space growth and the quality of the space growth, few more stores here and there do not, we are not changing mobile in a significant way. But the key of the strategy is the space you open and the quality of the space you open.

That's very, very important.

My question is on space et cetera have been answered but can you just, is there any color you could give on the Q2 gross margin at all but that would be appreciated. Thank you.

Well that we don't like to elaborate on the gross margin on a quarterly basis. [Technical Difficulty]

I don’t know you can hear us or either what’s the problem with the line.

Hello.

Go ahead Paul. Paul?

Hello yes.

Yes please go ahead, sorry was a drop in the line that we have just recovered, please go ahead.

The question I just asked a couple of minutes ago was I was wondering if there is any color you could give around the Q2 gross margin?

Yes, I have already answered, but nobody was – hear me. Okay well, I will repeat my answer.

No, it is to say that as you know, we don't like to elaborate very much on the gross margin on quarterly basis because this is not our approach. This is not the way we manage our company.

The gross margin is a combination of many different things, you have of course, the like-for-likes as well sales growth, you have the product mix, you have the fashion trends, you have currencies, you have raw material costs, there are many, many elements involved in the gross margin. And globally at the beginning of the year in the month of March, we were guiding for a stable gross margin during the year in this first half.

We have achieved this stable gross margin plus 12 basis points and we keep this stable gross margin guidance for the full year. And we don't like to elaborate very much on the gross margin on a quarterly basis.

As I was saying to you because this is not our approach in terms – of running the business, but the globally we can say that the system has been a positive in terms of the gross margin evolution with this 12 basis points gross margin increase which means a stable gross margin during the season in line with our guidance. We always say that we work for the stability of the gross margin that this is – much more than focusing on trying to maximize in this particular – in any particular season the gross margin evolution.

We are always thinking about the medium and the long-term evolution of the company.

There have been a couple of questions on the webcast platform. The first of which is, you’ve highlighted a number of openings of stores in Dubai, in Turkey, in Barcelona.

How is this relate to your strategy please?

I think we have covered during the presentation this is an essential part of our strategy. The quality we always talk about quality, quality of our product quality of our online offer and of course quality of our stores.

All these stores that we are opening are very, very unique and here were mentioning Istanbul. We were mentioning Dubai.

We were mentioning Barcelona I have also mentioned Preciados in Madrid. Then in the presentation we were mentioning briefly but did you take look at the picture the new Zara Man image which is really unbelievable and Zara Kids that will be introduced in our stores from early next year.

This new image constantly upgrading the image of our stores, constantly increasing the quality always investing, renewing, so this is and with this full integrated approach between starts and online. So having the best possible environment for our customers to always having the customers in mind and this is an essential part of our strategy.

The second question relates to cash, the cash position is the highest ever despite stepping up dividend payment significantly. Can you give some color please on the cash generation and what we can expect going forward.

Inditex continues to generate strong cash flows, what’s the reason for the strong cash flow, cash growth of 13% over the period please.

Well, I think this is very relevant, we combine significant sales growth with strong cash flow generation. You know that the first priority always in terms of our cash flows is to invest in the long-term profitable growth of the company, but we are able to combine this with an attractive and predictable shareholder remuneration policy, we announced our new dividend policy in the month of March and even after paying these 17% increase in the interim dividend.

We see a very, very strong cash position at the end of the period. It has to do with the execution of the business model with sales growth with the fact that we are becoming less capital intensive, because of our strategy and also of course with a very healthy working capital evolution that has also a lot to do with the full integrated approach between stores and online and with the stock integration.

So globally, we believe that we will continue being able to combine this strong sales growth with a strong cash flow generation.

Thank you. And we will continue and that's through our capital markets department.

Thank you.