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Inditex suffers first losses in its history

A Bershka store, part of the Inditex group
Photo: monticello / Shutterstock.com

The coronavirus crisis has hit Inditex hard: the Spanish fashion group's quarterly turnover was halved, while profits ended below zero for the first time ever. To make matters worse, recovery is going slower than expected: only in China and Korea has the situation returned to normal.

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Focus on online

The first quarter of 2020 has produced some historically negative results for the owner of the Zara and Bershka brands, as 88?% of its stores were forced to close. The group saw its turnover drop from 5.9?to 3.3?billion euros and to make matters worse, profit dropped to 409?million euros below zero - the first losses in the group's history, Reuters reports.

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A positive side-effect of the pandemic was the huge hike in online sales: quarterly sales went up by 50?%, April even saw online sales almost double (+?95?%). This confirms Inditex' forecasts that online will make up for a quarter of total sales, compared to the current level of 14?%.

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Smaller stores close

Apart from online, the group will also focus on larger stores, raising its total store surface by 2.5?% per year. Conversely, the group wants to close a thousand smaller stores in 2020, and even 1,200 in 2021. These plans are expected to cost the company 900?million euros per year.

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As the pandemic slows down, so does the turnover drop. Turnover in May was 49?% of the level of 2019, in the first week of June that has gone up to 66?%. Only in China and Korea has turnover been normalised, the Spanish chain said according to Reuters.

午夜神