The owners of Zara, Inditex said it has booked its first loss as the coronavirus crisis forced it to shut most shops but its shares rose after it unveiled a 2.7 billion euro.
The loss which is $3.1 billion, is pushing the cloth retailer to accelerate its focus on large stores and online sales.
Inditex, the cash-rich owner of fashion brands like Massimo Dutti and Bershka, said the rapid drop in sales had slowed, with sales at constant currencies falling 34% in the June 2-8 period over a year earlier, versus a 51% slide in May.
Despite tumbling sales, inventories still fell by the end of February to April the first quarter compared to a year ago, underscoring Inditex’s ability to respond to demand.
“Impressively – especially in the current environment and testament to the strong business model – inventories were actually down 10% at the end of the quarter,” JP Morgan wrote.
Shares in Inditex, which said it would pay a 0.35 euro/share dividend for 2019, rose 1.2%.
Shop sales in Asian countries, such as China and Korea, were reaching the same levels as last year, Inditex Chairman Pablo Isla told a conference call.
According to data compiled by Reuters, Inditex booked a net loss of 409 million euros after sales tumbled to 3.3 billion euros, down from 5.9 billion euros in the same period a year earlier.