ZARA (Inditex Grp), the world’s biggest clothing retailer, has slumped to its first quarterly loss as a public company. Despite first-quarter sales slumping 44%, Shares in the Spanish fashion group rose 1.9%.
After it unveiled a €2.7 billion ($3.1 billion) plan to accelerate its focus on large stores and online sales and the plan will close up to 1,200 smaller stores in 2020 and 2021 in a shift to bigger stores as part of a push to drive sales.
ZARA (Inditex Grp):
The company , which owns other brands Bershka, Massimo Dutti and Pull & Bear said it would close 1,200 stores permanently by 2021, which accounts for up to 16pc of its total number of branches.
This including Zara, with at least 250 closures. Europe, excluding Spain, and Asia will be worst hit by the attempt.
Inditex explained, their net sales decreased 44pc to €3.3bn (£2.9bn) for the three months to April, despite a 50pc increase in trade online as locked-down customers sought to carry on spending.
In Asian countries such as China and Korea, store sales reached the same level as last year, Inditex chairman Pablo Isla said, when called for a conference.
The company said it would spend an additional €2.7 billion overall to upgrade the technology in stores and drive its online sales so that they made up a quarter of sales by 2022, compared to 14 percent now. Online sales surged 95 percent in the lockdown in April.
Inditex estimates said the focus on bigger stores would expand shop floor space by about 2.5 percent a year in 2020-2022.