Inditex profits drop as shop closures outweigh online growth

Spanish retail group Inditex’s revenue, profit and cash generation reached “historic” levels in the first half of this yea
At the end of July, the group had 6,654 stores across the world.
// Inditex profits reach £940m in its 2020 financial year
// Inditex attributed its resilience to its ecommerce business
// The fashion group operates chains including Zara, Zara Home and Pull & Bear

Inditex has generated a profit of €1.1 billion (£940 million) in its 2020 financial year, “emerging stronger” from the Covid-19 pandemic.

The fashion group, which operates chains including Zara, Zara Home and Pull & Bear, posted the net profit in the year to January 31, down from €3.6 billion the previous year.

Inditex attributed its resilience to its ecommerce business, having delivered a €1.3 billion net profit during the second half of the financial year.

READ MORE: Zara owner Inditex narrows quarterly sales decline

Inditex’s net sales declined 28 per cent year on year to €20.4 billion as it had to temporarily close its store estate during lockdowns.

Meanwhile, its online sales surged by 77 per cent in local currencies to €6.6 billion.

Inditex launched its online offer in 25 new markets during the year and used a rapid deployment of its stock management system to fulfil 46 million online orders worth €1.2 billion from its stores during the year.

The group reduced operating costs by 17 per cent during the year, which the business attributed to its “flexibility and ability to adapt”, and increased gross margin on a local currency basis by 170 basis points to 57.6 per cent of sales.

“Inditex has emerged stronger after such a challenging year thanks to the amazing commitment displayed by everyone here at the company,” Inditex’s executive chairman Pablo Isla said.

“The digital transformation initiated in 2012, which is built around the integrated store and online sales platform, has proven to be the right strategy.

“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 sustainable sales platform, which places us in an excellent position for the future.”

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