Inditex sets aside 287 million euros for corona crisis

Spanish fashion group Inditex (Zara) has had a good run in 2019, but is now bracing for the corona crisis. The fashion giant has set aside 287 million euros for future damages and has already closed 3,785 stores worldwide.

Strong results

Last year, Inditex managed to raise its turnover by 8 % to 28.3 billion euros. On a comparable basis, turnover rose by 6.5 %, pushed forward by a 23 % online turnover rise (to 3.9 billion euros). E-commerce now accounts for 14 % of Inditex’ complete turnover.

Net profit increased by 6 % to 3.64 billion euros, already taking into account a buffer of 287 million euros that has already been deducted as inventory provision for setbacks that will undoubtedly follow as a result of the corona crisis. Without this deduction, net profit would have increased by 12 %. EBITDA rose by 39 % to 7.6 billion euro.

Half of all stores closed

Despite the good results, all eyes are already on 2020 and the consequences of the corona pandemic. As of 17 March, 3,785 of the group’s stores in 39 different markets had already been closed as a precaution. That is no less than half of all the retailer’s stores. However, with the exception of eleven shops, all Chinese stores are open again.

Due to the global health crisis, turnover has fallen by 24 % in the first two weeks of March. Between the first of February and today, the total decrease was 4.9 %. Because of the current uncertainty, the company’s Board of Directors has decided to net yet pay out a dividend for 2019 and instead allocate last year’s net profit as a provision. In July, when the annual general meeting takes place, more clarity should be provided about the dividend payments.