Parent company of Zara, Inditex book first quarterly loss

Zara

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.

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