TFG- FINANCIAL PERFORMANCE IN FASHION: A HORIZONTAL, VERTICAL AND RATIO ANALYSIS OF INDITEX AND LOEWE (LVMH)

Abstract

This study conducts a comparative financial analysis of Inditex and LVMH's Fashion & Leather Goods division over the period 2020¿2023, applying horizontal analysis, vertical analysis and financial ratio analysis to examine how two fundamentally different business models within the fashion industry generate distinct financial structures and performance outcomes. The analysis finds that LVMH's Fashion & Leather Goods segment consistently delivers operating margins between 39.9% and 41.6%, reflecting the extraordinary pricing power of the luxury model, while Inditex demonstrates superior asset efficiency and a progressive improvement in profitability, with EBIT margin growing from 7.4% in 2020 to 18.9% in 2023. The study concludes that neither model dominates the other on all financial dimensions: Inditex creates value through velocity and capital efficiency, while LVMH creates value through brand equity and pricing power. From an investment perspective, LVMH offers greater resilience in adverse conditions while Inditex offers superior capital returns in growth environments.