Spanish fashion giant Inditex has reported a fall in annual profits due to the Covid-19 pandemic.
In the year to 31 January 2021, with trading hours having been restricted by 25.5 per cent, net profits were down by more than two thirds to €1.1bn. In contrast to the €3.64 billion it achieved in FY19.
The company, which operates over 7,000 stores around the world, including the Zara, Pull&Bear, Massimo Dutti, Bershka and Zara Home chains, saw sales drop 28 per cent from €28.29 billion to €20.4 billion.
Online sales however increased – registering ‘outstanding growth’ of 77 per cent in local currencies, to over €6.6 billion. It was, says the company, a “landmark year in Inditex’s transformation into a fully integrated, digital and sustainable business model”.
Inditex’s rapid, full rollout of its integrated stock management system (SINT) across its entire estate was a highlight of the year. Previously only available in 5,777 stores across 89 markets, at 100 per cent capacity it enabled the group to fulfil 46 million online orders worth over €1.16 billion from its stores.
Strong customer engagement also gave the group a boost. Online visits increased by 50 per cent to reach 5.3 billion. It has around 200 million followers on social media. And 132 million shoppers actively use its various apps. Over the year, it also launched its online sales platform in 25 new markets.
Pablo Isla, Inditex’s executive chairman, said: “Inditex has emerged stronger after such a challenging year thanks to the amazing commitment displayed by everyone at the company.
“The digital transformation strategy initiated in 2012, which is built around the integrated store and online sales platform, has demonstrated correct.
“Inditex as a company is stronger today than it was two years ago, with a unique business model and a global, flexible, digitally integrated and efficient sales platform, which places us in an excellent position for the future.
In a trading update, relating to the first quarter of FY21, the company reported a glimmer of positive news, as its stores start to reopen.
Store and online sales in local currencies decreased by 4 per cent in the first week of March 2021, with 15 per cent of stores closed. Less than the 15 per cent decline in sales for the whole of February 2021, which had 21 per cent of stores closed.
Excluding the five significant markets with mandated closures (Germany, Brazil, Greece, Portugal and UK), sales actually registered growth of 2 per cent between 1-7 March.
The company expects “practically 100 per cent of stores” to be open by 12 April – the date when ‘non-essential’ shops could reopen in England and Wales.
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