The owner of fashion brands such as Zara, Bershka and Massimo Dutti, recorded a 44% drop in sales in the first quarter of 2020, despite 88% of the Group’s stores being closed at some point during the period due to the Covid-19 pandemic, reports ILM.
Pablo Isea - Executibe Chairman of inditex
Inditex’s net sales for the first quarter of the year fell to €3.3 billion from €5.9 billion in the same quarter of 2019. Gross profit declined to €1.9 billion from €3.5 billion, while the gross margin was rather flat at 58.4% from 59.5%. Profit on an EBITDA basis amounted to €484 million compared with €1.7 billion a year earlier, resulting on a net loss of €409 million, against a profit of €734 million in the same period of 2019. Operating expenses decreased 21%, “thanks to active cost control during the period, said Inditex. Online sales recorded strong growth of 50% during the period, specifically increasing by 95% year-on-year in April. The company’s net cash position “remains robust”, at €5.8 billion, compared with €6.7 billion as of April 2019.
Pablo Isla, Executive Chairman, Inditex, has unveiled the Group’s plan for the next two years, under which the Group is to accelerate and broaden its forward-looking digital transformation strategy. According to Isla, Inditex is to invest €1 billion in bolstering the online business and a further €1.7 billion in upgrading the integrated store platform, deploying advanced technology solutions. Inditex expects online sales to account for over 25% of the total by 2022, compared with 14% in 2019. The Group is also planning for larger, higher quality stores, with higher levels of profitability, to help generate 4-6% like-for-like growth annually.
Inditex’s portfolio of brands includes Zara, Pull&Bear, Massimo Dutti, Bershka, Stradivarius, Oysho, Zara Home and Uterqüe.