Spanish giant Inditex has today reported its first quarterly loss after the coronavirus pandemic forced it to shut almost 90% of its stores in the three months from February to April 2020.
It said net sales fell by 44.3% to €3.3 billion (£2.9 billion) for the period, despite reporting a 50% increase in online sales.
As of 8 June 2020, 5,743 stores of Inditex’s 7,412 were open, across 72 markets. The company expects to reopen in most key markets by end of June.
The world’s largest fashion group described the losses as being a sign of how they are being “materially impacted” by the coronavirus pandemic.
The group also unveiled plans for the next two years, which includes investing €1bn in increasing the retailer’s e-commerce operations, with a further €1.7bn in upgrading its integrated store platform.
The implementation of an RFID system will be introduced across all Inditex brands before 2021, enabling garment tracking and integrated inventory management.
Despite a visible increase in sales in May in some markets, Inditex confirmed that they are “not yet at normal levels.”
Inditex also announced plans decrease its’ store network to between 6,700 and 6,900 stores, from the 7,412 today, which will involve opening 450 new stores and absorbing between 1,000 and 1,200 smaller-sized stores.
Inditex Executive chairman Pablo Isla said: “Our priority through the crisis has been and continues to be the health and safety of our people and our customers.
“I would like to publicly thank all of our people for their tremendous commitment throughout the global health crisis and during the gradual return to our stores and operating facilities.
“I would like to highlight how they have consistently followed the appropriate protocols, which has delivered a consistent message of responsibility.”
Sophie Lund-Yates, Equity Analyst at Hargreaves Lansdown, added: “The combination of ambitious plans and weak sales has taken something of a hammer to profits and the end of lockdowns won’t automatically translate into normal sales volumes.
“That said, Inditex is pivoting in the right direction, and if investors are prepared to take a longer-term view, this Spanish powerhouse is in a better position than most of its peers.”