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.
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.
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 %.
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.
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.